Present and Historical Benefits of Nuclear Power for Hungary and the Soviets

Buda to Baja: Leg 1 of the South & Central European Energy Expedition (#SCEEE), post 2 of 2. Post 1, can be found here.

“Energy is ideology,” stated a Bulgarian energy expert in relation to Russia’s use of energy as a projection of power. But, he continued, the age of energy as a weapon is over, the options are now plentiful. While there are more options today, it is important to frame Soviet and Russian technology as a form of influence corresponding with particular ideologies and forms of governance. This is an emerging theme from my interviews and conversations on the historical role of the energy system in former Communist countries.

Picture of a young Communist worker building the foundation of Hungary's future energy system
Picture of a young Communist worker building the foundation of Hungary’s future energy system. Displayed at the Paks NPP Visitor Center.

Ideology is often perceived to be a function of governments. That is, it is a top down process – similar to building up the idea of nation. But we can also see that ideology – like market ideology in the EU – also works in the form of governance. And here I change from the use of ‘government’ to the use of ‘governance’. Because in academic literature (including mine) we perceive governance as a technocratic rule making process. This is invoked for the regulatory systems propagated by the EU. But even within the EU (and discussed elsewhere in this blog and in this project) we have the propagation of neoliberal market ideology.

The connection I want to make to nuclear power in Hungary and in former Communist countries, is the Soviet Union was able to use ‘governance’ to instill and propagate its own ideology of societal goals through technology, including scientific expertise and processes. Nuclear power was one element of the energy system used to integrate and build grand projects that modernized the economies of COMECON countries (see my previous post).

Looking at the history of Paks (and nuclear power in the region) integration of the eastern satellites into the Soviet Union was facilitated by the energy infrastructure, such as gas pipelines and nuclear facilities. This integration lends itself to political integration and resource dependency through fulfilling social contracts for the built up expectation the state will provide low cost energy – and not payed from the salaries of citizens.

Continuity of Investments

Recent Russian efforts to foster integration by building new nuclear power plants and gas pipelines in the region represents building on past investments. Continuity of investments, is an areas I’ve examined in the past for companies like E.ON and RWE entering new EU Member States, but I (and others) have overlooked and failed to perceive the sunk costs of the Russians/Soviets into the Eastern Members states’ energy infrastructure and knowledge networks. Previous rounds of investments are represented in the Paks power plant itself, built in the 1980s. There is considerable knowledge capacity (including the extensive training given to each worker) built up since the early 1980s.

Brief video of the Soviet Memorial at Dunafoldvar where I spent one night on my bike trip to Paks.

Shifting of the governance system – and also the accepted ideology – away from a centrally planned economy to one emphasizing market forces, building and operating the energy infrastructure, undercuts and devalues the previous round of investments (under the previous regime). This observation is extremely important in my later examination of the current expansion of Paks NPP. Paks therefore is not just a component of Hungary’s and the region’s energy system, but an ingrained technological, political and social element of the previous and current economic system (including the guiding ideology). Renewable energy may make market sense, due to its smaller scale and shorter payback periods, but in political and social systems operating in a governance system of centralized energy systems, nuclear power fulfills multiple five-year plans.

Nuclear power works within this centralized governance system on multiple levels, in the respective order: 1) physical; 2) knowledge; 3) economic; 4) geopolitical; and 5) social.

Physical integration into the environment
The physical location of Paks Nuclear Power plant on the bank of the Danube is as much of a technical requirement as it was for assembling the structure. Cooling towers are not necessary, as river water is used for cooling and steam generation. In addition, production of the nuclear power plant components was a regional endeavor, enabling key components to be shipped on the Danube. For example, the reactors were made in Czechoslovakia at transported on the Danube. The use of the Danube and the sourcing of the parts underscores the regional dimension and participation in nuclear power.

In my future bike trips on the Danube I will be visiting the other nuclear power plant facilities, documenting the role of the Danube in tying together both the nuclear facilities and the economies of the region.

Knowledge integration
Operating the nuclear power station required students and employees to travel to Russia and the German Democratic Republic (DDR). This extensive education and travel results in the acculturation of experts into nuclear science and operational cultures. Education and training was also done at the Technical University of Budapest, this is where the Hungarian nuclear experts formed the basis of their careers.

Interestingly, during the early years of operation at Paks, the shift of workers were duplicated. There was a Hungarian team and a Russian team of operators performing the same functions. This enabled training and assisted in double checking that everything was done according to procedures.

Economic and competitiveness
The focus here is on the role of nuclear power in laying the groundwork for lower energy prices. But let’s not lose sight that the slogan ‘too cheap to meter’ is also an American expression to demonstrate the projected prowess of nuclear power. Currently, over 50% of Hungarian electricity consumption is supplied by Paks NPP. The working assumption (by some experts) is the full cost of nuclear power is reflected in the market price. I’m currently researching the construction costs and how these were paid. But the working assumption by some Hungarian experts and politicians is the full cost of nuclear is reflected in the current electricity price. From their perspective future nuclear power is perceived to offer this price advantage over renewable or coal power. The dominant paradigm in Hungary, Bulgaria and Russia is nuclear is cost competitive, resulting in a competitive economy.

Geopolitical
The extensive physical and knowledge integration into the Communist economic system enables a legacy of Russia to remain embedded into the nuclear power industry. This extends the technical hand of Russia and keeps the former satellites close. Thus the current raging debate over expanding Paks and how this ties Hungary to Russia for another two generations. The debate is not only technological (nuclear or not) but an issue of sovereignty and political alignment. Does Hungary want to cut off a highly symbolic and historical tie that offers Hungary economic and social strength, and go with a more short-term neoliberal market based energy system? Under the current Orban government this is simply not an option – the centralized energy system remains reflecting the political governing style.

In a region that placed science in the highest regard, and energy infrastructure development as an expression of ideology along with a symbol of economic might, moving away from large scale energy projects goes against the grain. More deeply, the embedded physical assets, the developed knowledge and supply networks contribute to a legacy system that locks-in technology, engineering choices and geopolitical influence. Shutting down the nuclear power industry in these countries is akin to shutting down German solar or closing the coal mines. In a region and country with high support for nuclear power, it is unlikely that Hungary or Bulgaria will give up nuclear power. It is essential to consider these aspects and the embeddedness of energy technology into broader political-economic and social networks.

Social integration
Politically the choice to remain with nuclear is a continued expression of national might and scientific prowess. Solar and wind energy represent – not just a decentralized system, but technology owned and developed by Western firms that also control and profit from selling this. Giving up on ‘Russian’ nuclear technology undercuts CEE politicians own political and social standings. The fond recollection by workers of how Paks was built and the role of KISZ (the young Communist party), holds a strong legacy throughout the country. The 1980s were a time of prosperity for Hungarians, Goulash Communism worked. So much so, that by the time reactors 3 and 4 were being built new Hungarian companies were supplying the technologies for these, rather than Russian ones. Entrepreneurship was alive in Hungary in the 1980s. (I’m concentrating on the nuclear up-sides of Communism, not the significant downsides of the political-social regime)

In the present day, the town of Paks thrives off the largess bestowed upon it by the power plant. The cultural life is said to be equal with cities much larger, sport and cultural clubs are prominent. It is probably the only ‘factory’ town from the 1980s still surviving in Hungary today (although maybe Gyor could be considered as well). The country as a whole is viewed benefiting from Paks. MVM (the state owned company and owner of Paks) holds significant sponsorship throughout the country of cultural events. Tangible benefits are perceived from nuclear power in Hungary. In a sense, in a political-economic climate dominated by corruption, the only law that still works is the law of physics, and the role of science (maybe things were not perceived so differently under Communism). Corrupting or swaying this scientific knowledge can only result in a disaster. At least some social faith can be placed in physics of the atom.

Conclusion
The term ‘governance’ has a much more modern connotation to it. Often this is expressed in reference to EU expansion and technical rule making. In relation to Soviet nuclear technology, the spread of technical knowledge and exchange of ideas among experts can also be viewed as a form of governance. Hungary’s decision to remain nuclear is set within these historical and broader networked elements that hold centralized systems essential for the political system. Socially, it is still expected government will assist in price support. Providing continuity to past investments – of a centralized system – attempts to fulfill political and social expectations. Whether this is financially sound, considering broader technological trajectories, remains to be examined.

Energy Expedition Summary: Nuclear Power and the Danube

Buda to Baja: Leg 1 of the  South & Central European Energy Expedition (#SCEEE). Post 1 of 2.

The Danube river proves to be an essential element to the energy system of Eastern Europe. The Danube integrated Eastern European Communist countries with the Soviet Union, facilitating economic cooperation through COMECON, the counterpoint to the Western OECD. To gain a unique and new perspective on energy technologies and relations I am biking down the Danube river from Budapest to the Black Sea and in a shale gas region in Poland. Here is a summary of the first Hungarian leg from Budapest to Baja.

I traveled by bike from Budapest to Baja, from May 21st to May 24th. On Friday May 22nd, I stopped at the Paks Nuclear Power Plant to meet with representatives of Paks and a local Paks politician. Honestly, after biking 140 km in the rain, over two days, their genuine hospitality and patience was outstanding. In another post, I’ll dive into the history of Paks and my visit, because first it is important to connect with the Danube river and its emerging meaning for me in the energy system of the whole Eastern European region.

Budapest to Baja: Basic route I took on bike - but there are some exceptions.
Budapest to Baja: Basic route I took on bike – but there are some exceptions.

Biking down the Danube began as a separate personal goal. It merged with my idea for a book and a research project when I realized nuclear power plants were located along the Danube. I wanted a method to connect with the average citizen to understand their perspective on regional energy politics and technologies. What I learned by this four day bike trip is the Danube serves as an essential conduit for the region’s energy infrastructure and facilitates political economic aims for integration of the region. It is a silent player in regional integration, but one which I hope to highlight through my research.

Reflecting on my trip (in a dry room back in Budapest) the perspective, I gained by riding a bike along and through the countryside surrounding the Danube, connected me to the land and water. This connection is essential when we consider the energy resources and technologies.

The natural beauty and history along the channelized Danube is striking. Contrasting these with the most technologically advanced and dangerous energy technology humans have created is profound. It is also this nature that cools and enables the technology to function. The contrast with farms, vineyards, and Roman ruins provides the historical context to frame how humans existed without electricity to the means we now use to generate electricity.

The building of Paks also relied on the Danube to transport materials: creating a regional supply chain of nuclear power plant components. For example, the reactors were made in Czechoslovakia and transported on the Danube.In addition the turbines were made in Germany, while the steam generators are Hungarian made by Ganz. The use of the Danube and the sourcing of the parts underscores the effort the Soviet Union went to create a regional involvement of countries in building a nuclear power industry – they embedded nuclear power in the region through knowledge and commercial networks.

I made it to Paks
I made it to Paks

Importantly, the building of the nuclear industry was based around COMECON (Council for Mutual Economic Assistance). COMECON served an important role in integrating the national economies of Communist states with the Soviet Union. This offered an economic and political framework to build NPPs in Czechoslovakia, Romania and Bulgaria. Poland, after giving the go-ahead, later opted out. In all these countries similar physical integration of parts networks and sourcing was done. Rather than the technological components emanating from Russia (as we think today), the parts suppliers drew on COMECON countries. We can now view the Danube as facilitating this relationship and construction of NPPs.

Finally, it is important to reflect on the special view biking provides in connecting the Danube to energy infrastructure. Honestly, biking in the rain for over 160 km out of about 216 km wasn’t the most enjoyable (seriously, a little pity is earned). But I really gained a new perspective. From the bike I was able to reflect on and experience Hungary, which is dramatically different from what I (and most people) experience in Budapest. Hungary has four of the poorest regions out of 20 in the EU. Placing this poverty and the people within the broader energy debate enables a better contextualization of either justifying, or not, the pursuit of certain energy technologies and policies. I look forward over the next few months to provide this perspective more for Hungary and the region.

Some experimental videos made on the way

Launching of an Energy Expedition: #SCEEE

Today I’m launching the South & Central European Energy Expedition (#SCEEE). This project stems from my interests in the energy infrastructure in the Central Eastern European region. I also have a great interest in bike riding – particularly in Hungary. I established a goal this summer to bike from Budapest to the Black Sea. Combining the two interest seemed a natural fit that align with current research into efforts to keep energy prices low in Bulgaria, Hungary and Poland. These efforts are examined withing the broader context of the region’s market alignment to the European Union and its infrastructure alignment with Russia.

I am breaking the expedition into two legs. First from Budapest to Apatin, Serbia (where my great grandparents come from). This will only be about 4 days. In August, I’ll be biking then from Apatin to the Black Sea, passing through Bulgaria and Romania. Overall, I will be biking more than 1500 km and passing many of the regions nuclear power plants, hydroelectric facilities, thermal power plants and many, many farms.

The objective of this bike expedition is to observe firsthand and document both the centralized and decentralized energy infrastructure. The formal takes the shape in facilities like nuclear power plants, gas fields, district heating systems and damns. The informal are homeowners, farmers and communities using different energy sources like wood, coal, solar, wind, biomass for energy production. I also plan on interviewing and interacting with a range of stakeholders in these communities. Interviews are scheduled ahead of time and are also ad-hoc.

Picture from a bike trip around Lake Balaton in 2014. In front of a poster proclaiming the Hungarian governments slashing of utility prices.
Picture from a bike trip around Lake Balaton in 2014. In front of a poster proclaiming the Hungarian governments slashing of utility prices.

My aims are to establish from local officials, workers and ‘ordinary’ people how energy prices and energy technologies influence their everyday lives. In particular I want to contrast this everyday perspective with the those of policy makers, industry officials and representatives of organizations. The latter are often represented in a disproportionate way in my (and other academics) research on energy policy.

This back to basic approach is meant to infuse historical field practices often used in the discipline of Geography (I’m a Geographer by training). Much of this training I received as an undergraduate at the University of Minnesota Duluth under the influential Geographers of Professors Matti Kaups and Larry Knopp. In contrast, my MSc and PhD studies at the University of Bristol emphasized the theoretical approach – or at least the academic contribution stemmed more from the theoretical expression of the world, rather than expression of the world while using theory.

A final aim of the #SCEEE is to disseminate and educate to a wider audience what infrastructure exists and how local people interact with it. I will be blogging, tweeting (#SCEEE) and producing videos documenting these interactions. This real time data collection method and spot analysis will feed into more in depth research I am conducting with national level stakeholders and document analysis. Publications will be in the form of journal articles and a book on the pursuit of cheap energy prices and the social and geopolitical ramifications (and yes, I still need to find a book publisher – so offers are welcomed).

Finally, all expeditions are not launched solely in the interest of science. There is a personal interest that drives a person to explore and engage in a familiar or unfamiliar environment. This innate curiosity is what makes social science so much fun: The ability to break down larger social and environmental processes into categories that highlight systemic weaknesses or evolutionary trends (to name just a few themes). So I launch this expedition with the expectation of serendipity and chance to provide information to whet both my exploratory appetite and to inform the larger research project. My personal interest of energy and biking converge to propel both interests (literally) further down the road.

Nonetheless, looking out at the grey morning sky, I just hope my new tent repels the water that sinks many expeditions.

The Pull of the Communist Energy System

The role of the state in the energy system in Central Europe is fraught with historical ups and downs. Under Communism the energy system represented progress and equality with the Capitalist West. There is no doubt the energy system from gas transmission to electricity generation and transmission in all the former Soviet Union and its satellites was efficient. The energy system lends itself well to five year plans.

Last week I was in Bulgaria doing research on energy prices and the relaitons between Russia and Bulgaria (I’ll be having a lot more on this topic in future posts). I met with many renowned experts, including Bulgarian Atanas Professor Tassev, who has advised many governments and international organizations, including the World Bank. Atanas Georgiev and I sat in his office while he smoked away at his cigar. There are many old school habits that still persist the further east you go.

Professor Tassev is no doubt one of the leading experts on European energy, even if his spoken English is challenged. So I’m grateful to Professor Georgiev for translating for me. In the discussion over Russia Professor Tassev said, “When geopolitics talks, the politics shut up. And when the politics talks the economy suffers.” With this statement he gets to the heart of the energy debate between the EU and Russia.

The debate over energy is more than just everyday politics, it is about geopolitics which exist in a different realm. Our discussion was in the context of building a new nuclear power plant at Belene, Bulgaria. Russia was meant to build it, but Bulgaria backed out causing high tension between the two states.

Politicians act to influence economic development. The political strategy for the energy sector, whether in America (see my PhD thesis) or in Europe, is to provide electricity at the lowest price. Action will be taken over the choice of technology that fulfills the strongest social goals. In the case of Germany, ‘green’ goals are/were prioritized over upfront costs. In the CEE region, the price of electricity in the short term drives political decision making. Thus political interference in the regulatory pricing process.

Geopolitics is for the long-term. The long-term goals for energy technologies come in the form of nuclear reactors and gas transmission pipelines that span continents. Cheap and competitive electricity and gas today, must be preserved for those politicians that value the most energy costs. Open competitive and transparent markets, as those valued by the EU, provide no assurance on short-term or long-term price. Politicians involved in the economy fiddle with the elements necessary for economic growth. The energy sector is the backbone for any growing or declining economy, so there can be a convergence of domestic politics and international geopolitics in choosing energy technologies.

Russia posses both the technological know-how and natural resources to back up its geopolitical and political aims. These aims coincide with the domestic agenda of CEE politicians. Going forward economic growth in the CEE region is dependent on assurances and predictability in the price of energy. Price is seen by politicians in the CEE region as a competitive advantage against those EU countries with competitive and environmentally aware energy markets.

The Soviet Union modernized the energy infrastructure at a price each country could afford. Integration of these countries occurred through the energy infrastructure. A dependency built up over these years. For countries like Bulgaria and Hungary, turning away from Russia and this historical relationship becomes fraught with an inability of politicians to influence their economies. While a lack of engagement may be good for the economies, it is not good for the politicians. And this is where we have a stalemate between integrating into the EU’s interdependent energy system, and Russia’s dependent energy system.

Russia and Mackinder’s reach into CEE Gas Markets

The Magyar came next, and by incessant raiding from his steppe base in Hungary increased the significance of the Austrian outpost, so drawing the political focus of Germany eastward to the margin of the realm.

H.J.Mackinder 1904

Projecting Power from the Gas Heartland
What provides the best strategic advantage: Mobility upon the ocean or mobility across the stepped lands of Eurasia? The question was examined by Joseph MacKinder in 1904 before the calamities of the 20th century. Applying MacKinder’s treaties to Europe’s energy landscape of today provides important insights into sphere’s of influence. Today, we can draw on MacKinder and apply the sea vs. land argument for control and influence in Central and Southeast Europe.

In this post I will update a single key underpinnings of Mackinder’s consideration of spheres of influence, drawing from the concept of controlling the resources of the Euroasian landmass (Russia) compared to European counties with access (and control) of the seas. I do not address the historical role and influence of Mackinder’s writings. Reflecting on MacKinder is important because it serves as an important vehicle to understand current debates around Russia’s involvement in Central and Southeast Europe. By updating and re-positioning gas within Mackinder’s framework an assessment of the position of countries between Russia and Western European countries demonstrates important political and economic considerations in the price of gas. In this analysis I’m largely referring to EU member states Poland, Slovakia, Hungary, Romania, Bulgaria.

Historical Reflection

Thus marginal ocean-fed commerce… form[s] a zone of penetration round the continents, whose inner limit is roughly marked by the line along which the cost of four handlings, the oceanic freight, and the railway freight from the neighbouring coast, is equivalent to the cost of two handlings and the continental railway freight.

–H.J.Mackinder 1904

If we update this cost of handling – not freight – but natural resources, such as natural gas, oil and even nuclear fuelrods, we begin to see that the past price of freight is still relevant for our discussion. The zone of penetration of ocean freight benefits those countries in Western Europe. While the countries in Central Eastern Europe receive lower priced gas piped across the continent from Russia. While countries in Northern Europe benefit from the piped gas from the North Sea – acting as a ‘land’ source for their energy needs – however, bringing that same gas to much of Central Eastern Europe is constrained by continental infrastructure and increased cost competition for network access in mainland Europe.

Price Differences

The price differentials are first evident in the border prices for networked gas between markets. Hungary’s estimated Russian border price for gas imports for June – August 2014 are at 22.18 Euro/MWh, while the better interconnected network of Germany has a hub price of 18.33 Euro/MWh. While Bulgaria shells out 28.12 Euro/MWh for almost total reliance on Russian gas.

Source: Market Observatory for Energy DG Energy, https://ec.europa.eu/energy/sites/ener/files/documents/quarterly-gas_q3_2014_final_0.pdf, pg 26
Source: Market Observatory for Energy DG Energy, https://ec.europa.eu/energy/sites/ener/files/documents/quarterly-gas_q3_2014_final_0.pdf, pg 26

LNG is the seabased routing of natural resources. LNG cannot compete against European and Russian sourced gas for Central Eastern Europe. And here I’ll keep my analysis at a pan-European level to demonstrate even with liquid Western European markets, Russia hold significant competitive advantage. In a direct comparison against global gas prices, Russian gas prices historically come out competitive. In the chart below, the main lines to observe are the Europe Oil Indexed Contracts [after concessions (BAFA)] these include Russian contracted gas, NBP which is a basket of gas prices (including Norwegian gas). Even US exported gas, represented by the Henry Hub price, needs to be doubled for US LNG export.

Source: “Reducing European Depedence on Russian Gas: Distinguishing Natural Gas Security from Geopolitics.” The Oxford Institute for Energy Studies, October 2014. [http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/10/NG-92.pdf.] pg 31
Source: “Reducing European Depedence on Russian Gas: Distinguishing Natural Gas Security from Geopolitics.” The Oxford Institute for Energy Studies, October 2014. [http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/10/NG-92.pdf.] pg 31
The regional price for cooperative regimes, we see that deals can be struck. In February 2015, on a to Hungary Putin gave the cooperative Hungarian Prime Minister, Viktor Orban a discount for his friendly attitude towards Russia. In renegotiating a gas import contract Budapest achieved a price of $260 tcm (thousand cubic meters) as compared to a European average of $270 tcm. Similar price adjustments, reflecting changes in international gas and oil prices, were also achieved for Austria earlier in 2015 and Bulgaria in 2012. The takeaway is Russia is competitive and willing to adjust to international shifts in gas and oil prices.

Adjusting wholesale gas prices is essential for influencing the political landscape in Central Europe. Household gas prices are politically important in the region. I discussed above the competitive wholesale market prices in Europe, but divergence is strongly apparent at the household level. Politically, this is where results are achieved for politicians.

The map below shows the price difference for households. Ultimately, as discussed elsewhere on this blog and in other writings by myself, it is the consumer price that helps direct political control and strategy in the energy sector. In the pricing map we have a clear division between those countries reliant on Russian piped gas for consumer prices and those reliant on sea based sources – even underwater pipelines from the North Sea and from Russia (Nord Stream).

Source: Market Observatory for Energy DG Energy, https://ec.europa.eu/energy/sites/ener/files/documents/quarterly-gas_q3_2014_final_0.pdf, pg 30
Source: Market Observatory for Energy DG Energy, https://ec.europa.eu/energy/sites/ener/files/documents/quarterly-gas_q3_2014_final_0.pdf, pg 30

When we draw in this information, and the map (above) represents a clear division between how energy markets and geopolitical influence can be exerted. The household price of gas is significantly different in Central Eastern Europe and proportionally lower than the wholesale price difference. In this ‘flash’ analysis I won’t average out the household price difference between the two regions, but eyeballing it there is a clear difference – particularly if the information on the higher wholesale price, European averaged gas price are contrasted with the lower household price. In my opinion there is a significant story of why these price differences exist.

Nonetheless, for our discussion here this gets to the heart of our MacKinder hypothesis. That control of the heartland – the pivot region (Euroasia), the “vast area of Euro-Asia which is inaccessable to ships… and is to-today about to be covered with a network of railways….[with conditions of] mobility of military and economic power…” lends itself to a comparison of gas pipelines, LNG, market structures and geopolitical influence. Events in Ukraine underscore the military might, while differential in household gas pricing underscore the economic might of today’s Russia.

Objections

Objections to both a MacKinder view and regional pricing differential views, I believe would have two points. First, they would say that the underdeveloped interconnector network lends itself to isolated markets. A Gazprom position, is that Central European isolated markets consume less gas and therefore are more costly to service, price adjustments just represent market trends. Second, both the break-up of the Soviet Union and the loss of Ukraine of Russia actually weakens the application of MacKinder and the Pivot region. My response to both of these arguments is that if gas prices are non-political then household gas prices would reflect the wholesale market price. However, the dramatic difference between EU household prices indicates elements of political and manipulated economic interests.

Conclusion

Pricing differences between EU member states falls along an important geopolitical fault line. Control of the Eurasian continental heartland and the natural resources, delivered via pipeline, provides a competitive pricing advantage over LNG and even delivery from more volatile regions like North Africa or from politically contentious and higher priced technologies like hydraulic fracturing. Continued reliance and even promotion of options to increase Russian gas into the SEE and CEE regions underscore the political importance Russia holds in securing and dominating these gas markets. As long as household energy prices are a dominant political issue, Russia will continue to hold sway in the regions’ energy markets by projecting its power through political leverage.

Key Sources:
Mackinder, H. J. “The Geographical Pivot of History (1904).” Geographical Journal 170, no. 4 (December 2004): 298–321. doi:10.1111/j.0016-7398.2004.00132.x.

Market Observatory for Energy DG Energy. Quarterly Report on European Gas Markets. European Commission, Directorate-General for Energy, 2014. [https://ec.europa.eu/energy/sites/ener/files/documents/quarterly-gas_q3_2014_final_0.pdf.]

“Reducing European Depedence on Russian Gas: Distinguishing Natural Gas Security from Geopolitics.” The Oxford Institute for Energy Studies, October 2014. [http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/10/NG-92.pdf.]