title: A critical analysis of Russian state and Gazprom conceptions of natural gas as a strategic resource and Russia’s gas exports to the European Union during the Medvedev presidency (2008-2012)
Creators: name: Sharples, Jack. D.
Publisher: name: University of Glasgow
Year: 2014
Subjects: subject: Russia, Gazprom, natural gas, energy policy, energy geopolitics, EU-Russia energy relations, energy sector state-business relations.

description: As the largest external supplier of natural gas to the EU with reserves sufficient for another 74 years at current production levels, Russia is a strategic energy partner for the EU, and will remain so in the coming decades. The first eight years of the 21st century brought a dramatic rise in European oil and gas prices, and the idea of Russia as an ‘energy superpower’. However, such a characterisation of Russia failed to account for the interdependent nature of the Russia-EU gas relationship, and reflected a lack of nuanced Western understandings of the relationship between political and commercial entities in Russia’s energy sector.

This thesis contributes to the gap in the literature by employing a social constructivist approach to the examination of Russian state and Gazprom conceptions of natural gas as a strategic resource and Russia’s gas exports to the EU. The crux of this research is the analysis of the convergence and divergence of Gazprom and Russian state interests and strategies, on the basis of their conceptualisations of natural gas as a strategic commodity. These interests are then played out in the relationship between Gazprom and the Russian state: where Gazprom and Russian state interests diverge, the degree to which the Russian state is able to impose its interests on Gazprom is highly significant. The extent to which Russia’s political leadership conceptualises gas as a political, rather than purely economic, resource not only influences Russian state interests, but also the degree to which those state interests converge with the commercial interests of Gazprom. The identification of Gazprom and Russian state conceptions of, and interests in relation to, natural gas therefore offers the possibility of rationalising Gazprom’s actions and strategies in commercial terms, where previously the presence of political interests may have led to the reductionist interpretation of those actions being little more than further evidence of Russia wielding the ‘energy weapon’.

In Russia itself, the state conceptualisation of gas as a strategic national resource has led to the government using state-owned Gazprom as a vehicle for state control over Russia’s resources. In Russia’s relations with Ukraine and Belarus, natural gas is both political and economic – the Russian government views gas exports to Ukraine and Belarus as potentially lucrative, but it is willing to trade economic utility for political concessions, with Gazprom again the vehicle for such deals. It is in relation to Russia’s gas exports to the EU that the Russian state sees gas as an overwhelmingly economic resource, where prices are highest and the potential for barter or leverage is lowest. The examination of the Nord Stream gas pipeline highlights the convergence of Gazprom and state interests in strategic gas projects, and further emphasises the economic interests of the Russian state in such projects, thus demonstrating that state interests are not always completely political. Again, this challenges the interpretation of the fusion of energy and foreign policy as evidence of the ‘energy weapon’, and offers the possibility of rationalising Gazprom’s policies. Such a rationalisation increases our ability to understand the dynamics of Russia’s gas exports, which in turn offers the possibility of more constructive cooperation between supplier and consumer.

The Medvedev presidency of 2008-2012 is particularly noteworthy, because it was marked by dramatic fluctuations of European gas prices, which exposed Russia’s economic vulnerability to commodity price shifts. At the same time, the EU gas market underwent a significant development in terms of increased supply-side competition, increased spot trading, and regulatory development (particularly the Third Energy Package), which rendered that market an increasingly competitive environment for Gazprom. The extent to which Gazprom is able to adapt to these developments, and the extent to which the Russian state will be willing to continue supporting Gazprom if it does not, will be significant factors in Russia’s future role as a strategic gas supplier to the EU.