Caspian Report - Issue: 08 - Fall 2014

Because of the decreasing trend of the
EU domestic gas production, the EU gas
import requirements have increased
rapidly over the last decade.
THE GENESIS OF THE SOUTHERN
GAS CORRIDOR
Gas is an essential component of the
energy mix of the European Union
(EU), constituting one quarter of primary
energy supply and contributing
mainly to electricity generation,
heating, feedstock for industry and
fuel for transportation.
Because of the decreasing trend
of the EU domestic gas production
(particularly due the United Kingdom),
the EU gas import requirements
have increased rapidly over
the last decade, leading to higher
levels of import dependence and
ultimately outlying the need to address
the issue of security of gas supply
at the EU level.
This need unexpectedly became
tangible in January 2006, when after
a long-lasting disagreement on
gas prices, Russia cut off supplies to
Ukraine for 3 days, Ukraine diverted
volumes destined to Europe, and as a
consequence gas supply to some Central
European countries fell briefly. 1
As a response to the energy security
concerns emerged after this Russian-Ukrainian-European
gas crisis,
the European Commission (EC)
launched in 2008 a double strategy,
aimed at enhancing the EU gas security
of supply architecture. On
the one hand, the EC targeted to enhance
the EU internal energy market
in order to foster gas flows between
EU Member States. On the other
hand, it aimed at enhancing gas
sources diversification, including
building LNG receiving terminals in
Central and South-East Europe and
pursuing the 4 th corridor (generally
known as Southern Gas Corridor) in
order to bring gas from Caspian and
Middle Eastern producing countries
to the EU.
The implementation of this strategy
-and particularly of the Southern
Gas Corridor- was accelerated after
another major natural gas crisis between
Russia and Ukraine occurred
in January 2009. In fact, this crisis resulted
to be even worse than the previous
one, as the transit of Russian
gas through Ukraine was completely
cut for two weeks, which resulted in
21
CASPIAN REPORT, FALL 2014
1.
As Pirani, Stern and Yafimava underline natural gas conflicts between Russia and Ukraine go back to the immediate aftermath of the
independence of the two countries. Regular transit conflicts emerged as transit usually became a part of the price dispute on the
Russian gas price for the Ukrainian domestic market. In fact, no separation between the transit gas network and the domestic gas
network exists in Ukraine and Ukrainian customers usually served themselves from the transit volumes which Russia called theft of
gas through the transit system. See: Pirani, S., Stern, J. and Yafimava, K. (2009), The Russo-Ukrainian Gas Dispute of January 2009:
A Comprehensive Assessment, OIES paper: NG27, Oxford Institute for Energy Studies.