Diversification Trajectories in Central and Eastern Europe since the Russo–Ukrainian
Gas Crisis of January 2009
Csaba Weiner, Ph.D.
Senior Research Fellow
Institute of World Economics, Centre for Economic and Regional Studies, Hungarian
Academy of Sciences
Russian gas dependence in Central and Eastern Europe (CEE) drives a big part of the
economic, social and political discussion, and the ongoing confrontation between Russia and
Ukraine has further amplified the importance of this issue. The Russo–Ukrainian gas crisis of
January 2009 urged Central and Eastern Europe to intensify efforts to diversify away from
Russian gas supplies and enhance security of supply. The recent period of changing gas
market conditions has presented some opportunities.
This paper reports the final results of a multi-year investigation into CEE gas markets. The
main objectives of this paper are: (1) to assess the degree of CEE dependence on Russian gas
and the Western Commonwealth of Independent States (CIS) transit countries (including
Belarus, Ukraine and Moldova), and (2) to gain insight into what has been done in CEE since
January 2009 to reduce these dependencies. This paper assesses whether any CEE countries
have benefited from the opportunities emerging from the new gas market conditions and, if
not, what factors have prevented them from doing so.
The work consists of a theoretical part and an empirical part. The theoretical part focuses
on the relatively complex definitions of the concept of “(inter)dependence/independence”,
“security of supply” and “diversification”. Central and East European achievements can only
be understood in the context of these definitions. Simplified definitions lead one to
misunderstand and misdiagnosis appropriate solutions. The paper concentrates mainly on the
long-term security of supply (along security of supply dimensions) as well as source
diversification, transit diversification and domestic gas production and demand (among
diversification options). The theoretical part of the paper develops a general CEE
diversification scheme for Russian gas imports.
The empirical part of the paper addresses four main points regarding diversification. First,
it illustrates the gas market changes affecting Gazprom’s market position in Europe and
examines Gazprom’s responses to these challenges, with a special emphasis on the CEE
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region. Second, it investigates the role of gas and gas imports in CEE. Third, it focuses on the
role of transit through the Western CIS and CEE, and the current state and impact of Russianled undersea bypass pipelines. Fourth, it assesses the changing degree of dependence in CEE
countries, and reports gas supply portfolios and existing and planned infrastructure for
importing gas.
In contrast to other studies, this paper provides an analysis of the dependence of all 14 gas
importing CEE countries on Russian gas and the Western CIS transit countries from a
comparative perspective using a broad range of relevant evaluation criteria. The goal is to
develop a more reliable and well-documented image of the current state of affairs under the
new gas market situation and to gain a better understanding of what factors truly define CEE
dependence on (and independence from) Russian gas.
I find that there is great variation across the Central and East European states’ degree of
dependence on gas, gas imports, Russian gas and the Western CIS transit countries. Some
progress has been made in diversifying and increasing the security of supply, but the degree
of progress and the patterns vary significantly from country to country. On the one hand,
powerful economic considerations help to explain why diversification has not made much
progress. CEE countries can take limited advantage of changing gas market conditions, due to
the long-term gas import commitments and the lack of necessary import capacity. On the
other hand, some countries have genuinely benefited from ongoing developments. Transitavoidance pipelines will provide large additional capacity which can also increase security of
supply for CEE consumers by providing the opportunity to arbitrage across gas transit
corridors. Despite many criticisms, the EU has taken steps that may help mitigate (the fear of)
Russian influence.
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