Central and East European diversification under new gas market conditions

The Russo–Ukrainian gas crisis of January 2009 encouraged Central and Eastern Europe (CEE) to diversify away from Russian gas supplies and new gas market conditions have afforded some opportunities for doing so. This paper assesses these achievements, as well as factors preventing CEE countries from benefiting therefrom. The paper addresses four main areas of CEE diversification: (1) gas demand, (2) domestic gas production, (3) transit, as well as (4) gas supply and physical infrastructure for source diversification. There is great variation in the degree of dependence on gas, gas imports, Russian gas and transit countries, across the CEE states. Some progress has been made in diversifying, but the degree of progress and the patterns vary significantly from country to country. Due to long-term gas import commitments and the lack of available import capacity, CEE countries can take only limited advantage of changed gas market conditions. But some countries have genuinely benefited from ongoing developments. Transit-avoidance pipelines 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 Russian influence.