Energy relations with Russia

Riku HuttunenDeputy Director General

Ministry of Employment and the Economy

Energy in Russia

• More than 25 % of global natural gas reserves• Gazprom monopoly (in transit)• Energy exports cover 60 % of Russian export revenues,

energy taxes cover appr. 50 % of federal budget• Very low energy efficiency – new thinking?• Large investments needed at all stages of energy chain• Huge gas field & infrastructure projects in Yamal, Sakhalin,

Shtokman etc.• Foreign investments (money) and technology is welcome,

Russian ownership preferred and preserved

Imports from Russia to Finland and the EU

Finland (2008) EU27 (2006)Natural gas 100 % 42 %Coal 84 % 26 %Crude Oil 83 % 34 %Electricity 12-13 % of consumption marginal

In Finland fuel substitutes normally exist; natural gas is not used for direct heating of houses like in Central Europe.

Oil and coal are globally traded goods.

Gazprom, Nabucco, Nord Stream and South Stream

EU and Russia

• Russia is the biggest supplier of natural gas and Russian economy is dependent on export revenues

=> very strong interdependence

• Energy high on the EU agenda since 2006• Russia-Ukraina gas disputes, Belarus• Latest crisis in the beginning of 2009

• EU energy policy:• Energy efficiency• Renewable (indigenous) energy sources• Geographical diversification of sources

Regional energy fora

• Many fora for energy cooperation in the North:

• EU Northern Dimension: energy is a part of Environment Partnership (NDEP), energy efficiency a priority

• BASREC (Baltic Sea Regional Cooperation)

• Barents Euro-Arctic Council

• Nordic Ministerial Council and nordic countries are active participants in regional cooperation with Russia

Russia and international agreements

• Energy Charter Treaty (ECT)• Russia signed, not going to ratify(?)• Would be important for gas transit, investments etc.

• Post-PCA Agreement• EU willing to include wide energy provisions (as in the ECT)

• Medvedev’s proposal (new legal instrument for energy)• Little additional value for the EU

• WTO membership• When?• Dispute settlement and other binding rules

Import and specific import dependencyCountry TPES

(Ktoe) Total net import

(% of TPES) Specific net

import ( % of TPES)

Specific Russian net import

( % of TPES) Estonia 5 174 38 20-30 20-30 Finland 38 000 64 10 10 Germany* 348 000 75 26 15 Iceland 3 500 28 0 0 Latvia 5 000 60 30-60 30-60 Lithuania 9 200 53 26 26 Poland 92 000 33 25 25 Sweden 54 000 46 2 0

IEA: OECD Countries Energy Balances, Non OECD Countries Energy Balances

The term specific import dependency refers to imported supplies that can not be re-placed at short notice by another supplier or without major investments. Since no re-gard is taken to fuel switching capability, the figures are gross estimations and will only give a preliminary view of the actual dependency. The statistics are mostly derived from IEA Energy balances from 2004. Additional information regarding the situation in 2005 has however been available in some cases.

* The potential for switching supplier is rather high in Germany. Depending on the actual prevalent circumstances the specific import dependency may be lower.