56
Russia’s monopoly of the European gas market is thus a framework by which the
country aims to enact policy in Eurasia, controlling the energy transit of Caspian
Sea states such as Turkmenistan, Kazakhstan, and Uzbekistan, and finally becoming
a key player and major supplier on the East Asia energy market (Wenger et al.
2009:118).
China’s growing demand makes it a target market for Russian oil and gas export.
Both countries were jolted to developing energy relations and signed the Sino- Russia
Action Plan (2005–2008) in October 2005. According to the agreement, Russian
Rosneft was to ship 10 mmt annually of crude oil to China’s Daqing by rail in 2005,
increasing to 15 mmt as of 2006 (Bedeski and Swanström 2012:140).
China pledged to commit to Russian security as “Russia’s gateway to the AsiaPacific.” From China’s prospective, Russia needs China to have an appropriate
political and military presence in the Asia-Pacific rim, and thus the Russians were
expected to accept the Dongbei-FREE NET price (Bedeski and Swanström
2012:140).
In 2012, a turning point occurred in Russian–EU gas relations caused by a
decline in export volume by a total of 10%. Gazprom managed to bring back its
market share by 2013, through granting price cuts to its most honored customers,
yet by this point it had found itself entangled in a European Commission probe into
its alleged abuse of market monopolization in East and Central Europe (Steven et al.
2014:251). Putin tried to shelter Gazprom from the EU investigation and announced
the so-called Third Energy Package as “harmful document,” but he is realizing that
the natural gas business is no longer a useful political instrument and the problems
attached to it are beyond the scope of “manual management” to deal with (Steven
et al. 2014:251).
As Brenda Shaffer argues, for the first decade after the collapse of the Soviet
Union, Russia was weak and possessed only modest means of circumventing the
establishment of new projects—especially the BTC project. However, since the second phase of Caspian Energy Diplomacy has been launched, Russia is stronger and
more confident in promoting its interests in the former Soviet region—particularly
in the Caspian (Shaffer 2005:7210–7212). According to Michael Klare, Kremlin
attempts to control pipeline networks from the Caspian Sea to their consumer market has an important impact on regional and global powers. Russia is both a regional
and global power whose networks are not only a source of revenue but also provide
Russia with political leverage over its “near foreign” neighbors. This is the reason
why the US is so determined to reduce Russia’s control and monopoly over the flow
of energy from the Caspian Sea (Klare 2005:155).
Russia’s strategic orientation in the region is heavily security-focused. Russia is
trying to expand its interests in the region and at the same time strengthen its geopolitical power. Caspian oil and gas are tied to Russia’s national interest, and control
over the region, direct and indirect, is a key goal for Moscow. Russia believes that
control over energy resources in the region is equal to reasserting control over the
region in its entirety (Hasan Khani and Karimi Pour 2012:35). The strategic goal of
Moscow is to tie a large part of the energy resources of the Caspian Sea and its
internal reserves to an export route that is politically and physically monopolized by
3 International Context of the New Era and the Caspian Sea Region
Russia’s monopoly of the European gas market is thus a framework by which the
country aims to enact policy in Eurasia, controlling the energy transit of Caspian
Sea states such as Turkmenistan, Kazakhstan, and Uzbekistan, and finally becoming
a key player and major supplier on the East Asia energy market (Wenger et al.
2009:118).
China’s growing demand makes it a target market for Russian oil and gas export.
Both countries were jolted to developing energy relations and signed the Sino- Russia
Action Plan (2005–2008) in October 2005. According to the agreement, Russian
Rosneft was to ship 10 mmt annually of crude oil to China’s Daqing by rail in 2005,
increasing to 15 mmt as of 2006 (Bedeski and Swanström 2012:140).
China pledged to commit to Russian security as “Russia’s gateway to the AsiaPacific.” From China’s prospective, Russia needs China to have an appropriate
political and military presence in the Asia-Pacific rim, and thus the Russians were
expected to accept the Dongbei-FREE NET price (Bedeski and Swanström
2012:140).
In 2012, a turning point occurred in Russian–EU gas relations caused by a
decline in export volume by a total of 10%. Gazprom managed to bring back its
market share by 2013, through granting price cuts to its most honored customers,
yet by this point it had found itself entangled in a European Commission probe into
its alleged abuse of market monopolization in East and Central Europe (Steven et al.
2014:251). Putin tried to shelter Gazprom from the EU investigation and announced
the so-called Third Energy Package as “harmful document,” but he is realizing that
the natural gas business is no longer a useful political instrument and the problems
attached to it are beyond the scope of “manual management” to deal with (Steven
et al. 2014:251).
As Brenda Shaffer argues, for the first decade after the collapse of the Soviet
Union, Russia was weak and possessed only modest means of circumventing the
establishment of new projects—especially the BTC project. However, since the second phase of Caspian Energy Diplomacy has been launched, Russia is stronger and
more confident in promoting its interests in the former Soviet region—particularly
in the Caspian (Shaffer 2005:7210–7212). According to Michael Klare, Kremlin
attempts to control pipeline networks from the Caspian Sea to their consumer market has an important impact on regional and global powers. Russia is both a regional
and global power whose networks are not only a source of revenue but also provide
Russia with political leverage over its “near foreign” neighbors. This is the reason
why the US is so determined to reduce Russia’s control and monopoly over the flow
of energy from the Caspian Sea (Klare 2005:155).
Russia’s strategic orientation in the region is heavily security-focused. Russia is
trying to expand its interests in the region and at the same time strengthen its geopolitical power. Caspian oil and gas are tied to Russia’s national interest, and control
over the region, direct and indirect, is a key goal for Moscow. Russia believes that
control over energy resources in the region is equal to reasserting control over the
region in its entirety (Hasan Khani and Karimi Pour 2012:35). The strategic goal of
Moscow is to tie a large part of the energy resources of the Caspian Sea and its
internal reserves to an export route that is politically and physically monopolized by
3 International Context of the New Era and the Caspian Sea Region