LISTOF TABLES
Table2.1Totaldomesticconsumptionofprimary energy1950–19708
Table3.1Europeanenergysecurityenvironments42
Table4.1EvolutionoftheEuropeangasmarketliberalisation48
Table4.2OverviewECJjudgmentsinthegasmarketsector 2002–201358
Table4.3ACERactivities2011–201463
Table5.1ComparisonDirective2004/67/ECandRegulation 994/201075
Table5.2EvolutionoftheGasCoordinationGroup78
CHAPTER1
Introduction
Abstract Thischapterintroducesthemotivationsbehindstudyingthe activitiesoftheEuropeanCommissionwithintheEuropeannaturalgas market.TheEuropeanUnion(EU)currentlyfacesanumberofchallenges,oneofthembeingthecreationoftheEuropeanEnergyUnion duringtimesoflowenergypricesandhighlyuncertainpoliticalenvironment.BystudyingandsystematicallycomparingtheCommission’sefforts tocoordinatenaturalgaspoliciesinthepast,importantinsightsinto possiblefuturedevelopmentscanbegained.
Keywords EnergyUnion EuropeanCommission Policyentrepreneur
InFebruary2016thenewEuropeanCommissionundertheleadershipof Jean-ClaudeJunckeradoptedanenergysecuritypackage(European Commission 2016g)aspartofthegeneralstrategytocreateEnergyUnion. Twoofthekeyelementsofthenewenergypackagearetherevisionofthegas securityregulationaswellasarevisionofthedecision994/2012/EUthathas establishedaninformationexchangemechanismwithregardtointergovernmentalagreementsinenergy.Additionally,theCommissionintendstomake substantialprogresswiththedevelopmentoftheLiquefiedNaturalGas (LNG)andgasstorage.TheenvisionedreformsandtheEnergyUnion idearepresentsomeofthemajorchangesintheEuropeanenergypolicy (Szuleckietal. 2016:1752).WilltheCommissionbeabletosuccessfully
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coordinateEuropeanenergypoliciesgiventhatmemberstates’ preferences, withcurrently(still)28 memberstates,remainhighlyheterogeneous?
ThecontributionathandmightprovidesomeinsightsintothisquestionbytracingtheCommission’sinitiativesandactivitiesovertheperiod from1980to2016intheliberalisationoftheEUgasmarketandthe developmentofthetrans-Europeaninfrastructure.Theideathatthe EuropeanCommissionisapolicyentrepreneurofEuropeanpolicymaking (Bauer 2002)andofEuropeanenergypolicies(Herweg 2015;Maltby 2013)isnotnew.Still,systematicanalysesofCommission’sactivitiesover alongperiodoftimearerare(forexceptionsseeBoersma(2015), GoldthauandSitter(2014),Proedrou(2012)).Additionally,weknow fromthepreviousliteraturethattherewasconsiderablevariationinthe successrateoftheCommission’seffortstocreateacoordinatedgaspolicy. Forexample,theearly1990swerecharacterisedbyratherincremental regulatoryactivity(Matlary 1997),whilemorerecentstudies findfaster andmoresubstantialreforms(Boersma 2015;Glachantetal. 2013; Proedrou 2012;Tosunetal. 2015).Onecannot,however,simplyconcludethatthesubstantialreformsinthegassectorarethedealingsofthe EuropeanCommission.Itisessentialtocontrolforotherpossibleexplanatoryfactors(Schmidt 2000).Previousstudiessuggestthatenergysecurity concernsmightbethedrivingfactorforadeeperintegrationintheenergy sector(Maltby 2013;Schubertetal. 2016).Forthisreason,differentenergy securityenvironmentsaresystematicallycomparedinordertotracethe differenceintheCommission’sstrategies.Basedonhistoricaldevelopments (Chap.2)andtheconceptualisationofenergysecuritydemandsasareactiontointernalandexternalvulnerabilities(Chap.3),twoperiodsformthe backboneoftheanalysis.Whileintheperiodfrom1980to2000the demandforincreasedgassecuritywaslow(givenlowgasdisruptionthreats andlowoilprices),theperiodafter2000ismarkedbyhighoilpricesand Easternenlargement,throughwhichtheEuropeangasmarketbecame moresusceptibletopossiblegasdisruptions.Ifwedonotaccountfor thesetwodifferentenvironments,wemightarriveatwrongconclusions andassigntoomuchimportancetotheCommission’sactivities. Additionally,theseminalstudybyPollack(1997)andthesubsequent literatureontheCommission’sformalandinformalpowersareusedto structurethediscussionoftheCommission’sstrategies.
Anexploratoryanalysisoflegislativeactivitiesintheliberalisation (Chap.4)aswellasintheinfrastructuresector(Chap.5)leadstointerestingresults.Inbothsectorsoneofthekeycontributorstosuccessful
policymakingwastheusageofnetworkgovernance.Intriguingly,when theCommissionfacesstrongopposition,ittendstorelyonitsinformal powers,ratherthanuseitsformalpowersvestedincompetitionlaw.This isinlinewiththetheoreticalworkthatsuggeststhattheCommission seeksconsensusinordertoprevent “punishment” fromthememberstates inthefuture,forexamplethroughachangeintheCommission’smandate ordelegationofcompetenciesawayfromtheCommission(Pollack 1997). Astrategythatworksquitewelltoovercomeacompletedeadlockisto leavelegislativeambiguity(asimilarobservationismadebyJegenand Mérand(2014)),whilewhenthereisastrongcoalitionofsupporters, strictdefinitionsanddeadlinesshouldbeincludedifpossible.The Commissionalsodisplayeditspolicyentrepreneurshipskillbyputting controversialmattersontheagendaduringthe “windowsofopportunity”,likethechangeinthegovernmentofthemainopposingmember stateorcrisissituations.
CHAPTER2
HistoricalBackgroundandOverview
Abstract Thischapterstartsbytracingtheideaoftheunificationofthe EuropeanenergymarketsfromthetimesoftheEuropeanCoalandSteal Communityin1950sandthenexplainswhyEuropeancountriessubsequentlybecameheavilydependentonoilsuppliesfromtheMiddleEast.It isthenarguedthatoildisruptionsofthe1970s,newgasdiscoveriesand the “steelforgas” dealswiththeSovietUnionweredecisiveforthe evolutionofthecurrentgasinfrastructure.Thepartsofthechapterthat tracethedevelopmentsoftheEUgasmarketsaftertheSovietbreakupand Easternenlargementshowthatthe2006and2009gasinterruptionsto UkrainehavepartiallymotivatednewEUgaslegislation,whichRussia perceivedasthreateningtohereconomicinterests.
Keywords Sovietpipelines Energydependence Gassecurity Gas disruptions
ThepursuitofacommonEuropeanenergypolicyanddistributional disputesamongmemberstatesareasoldastheEU.Indeed,the Europeanprojectstartedwiththeliberalisationofthecoalandsteel marketsafterFrance,WestGermany,Belgium,theNetherlands, LuxembourgandItalysignedtheTreatyofParisin1951toestablish theEuropeanCoalandSteelCommunity(ECSC).Liberalisationofcoal marketsrequiredthecreationofasinglecompetitivemarketforcoal,with
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notariffs,importquotasordiscriminatorypracticesthatwouldprotect domesticindustry.Atthetime,thecentraldistributionalconflictoverthe exactinstrumentsofliberalisationwasbetweenFranceandGermany:the priorbeingthemajorcoalconsumerandthelatterbeingthemajorcoal producer(Callender 1953).TheHighAuthorityoftheECSC,thepredecessoroftheEuropeanCommission,helpedtocoordinatethedisagreementsbetweenstates.Eventhoughsupranationalbodieswereperceivedas weak,theHighAuthorityenforceditssupranationalpoweronanumber ofoccasionsagainstallexpectations.After4monthsofnegotiations,West Germanywasobligedtodropitsdiscriminatoryfreightratesysteminsteel transportation(NewYorkTimes 1953).Then,frontierchargesoncoal, ironore,steelandscrapmetalwereremoveddespitetheoppositionofthe Germanshippers(NewYorkTimes 1955).Additionally,theHigh AuthorityimplementedtherestructuringoftheRuhrcoalsellingagency GEORGandtheFrenchcoal-buyingagencyATIC(HighAuthority 1956a).Thisassertivedisplayofsupranationalpower,supportedbyeconomicbenefitsassociatedwiththeliberalisationofthecoalmarkets(New YorkTimes 1956),instilled “moreserioustalkaboutextendingthe Community’sscopetoincludeotherformsofenergythancoal,suchas electricity,gas,oil,orevenatomicpower” (Diebold 1955).TheHigh Authorityrealisedatanearlystagethat “tobeeffective,apolicyforcoal wouldneedtobedovetailedintoabroaderpolicyforenergyingeneral” (EuropeanCommunityInformationService 1967:12).
2.1THE AGEOF OIL
SincethecreationoftheECSC,Europeanintegrationofotherformsof energyhasbeentedious.Thechangingdomesticandglobalmarketstructuresledtoagrowingrelianceonoil,ofwhichtheECSChadpreciouslittle. Thispresenteditselfasamajoreconomicproblem.AsJeanMonnet,the architectoftheECSC,pointedout, “Europe[was]theonlygreatindustrial regionwhich[was]unabletoproducetheenergyindispensabletoits economicdevelopment” (HighAuthority 1956c:3).Althoughtheurgency tocoordinateenergypoliciesincreased,politicaldisagreementsstalledany substantialprogress.Duringthisperiod,therejectionoftheFrench AssemblytoratifytheEuropeanDefenceCommunity(EDC)treatyin August1954presentedamajorblowtoEuropeanintegration(High Authority 1955:1ff).Additionally,theCommunityexperiencedamajor economiccrisisbetween1957and1959.Risingcoalstocksandfallingcoal
pricesledtocoalminesclosuresacrossEuropeandaconsiderablesocial upheavalofmineworkers(TheEconomicWeekly 1959).Germanyand Belgiumdeliberatelyimposedacoalimportlicensingsystem(Lubell 1961), ameasurethatwascontrarytotheprovisionsoftheECSCtreaty.More importantly,theHighAuthoritywasforcedtoallowmemberstatesto providestateaidforthecoalindustry(EuropeanCommunityInformation Service 1967:13) – ameasureclearlyincompatiblewiththeideaofliberal markets.TheHighAuthorityattemptedtousethecoalcrisisasajustificationtofurtherdevelopcommonenergypolicyandcreateadditionalcompetenciesatthesupranationallevel(EuropeanCommunityInformation Service 1959:5),butthememberstateswereonlywillingtocooperateby incrementallyapproachingdifferentsourcesofenergy.Thememberstates thusapproachedtheintegrationofnuclearmarkets first.
Astherewerenosubstantialvestedinterestsintherelativelyyoung sector,itwaspossibletointegratenuclearmarketsthroughEuratomin 1957.ItwasalsopossiblebecauseFrance,asthemajorpoliticalpower withintheECSCwithanuclearweaponsprogramme,didnotopposeit. However,thismomentumintheEuropeanenergyintegrationdidnot spillovertoothersourcesofenergy.ThenVicePresidentoftheHigh Authority,AlbertCoppé,remarkedthatthenuclearsectorwasanobvious choiceforfurtherintegrationbecauseitwas “notyetbarricadedby nationalism” (HighAuthority 1956b:6).TheSuezCrisis(1956),which raisedconcernsoverthesecurityofoilsupplies,offeredanopportunityto frameEuratomasasolutiontoEurope’senergyproblems(Doty 1956), especiallyintheelectricitygenerationsector.Thehighcostandtechnical complexityofnuclearpowermadecombiningresourcesnecessary(New YorkTimes 1957).AftersigningEuratom,theCouncilofMinistersasked theHighAuthoritytoworkonarangeofproposals “inregardtoenergy policy,suggestionsastohowsuchapolicymightbeputintopractice,and alistofmeasuresitconsidereddesirable” (HighAuthority 1964a:72).In responsetothis,threememorandawereissued(March1960,January 1961,October1961),noneofwhichbeingconcreteenoughforthe CouncilofMinisters.Therefore,theHighAuthoritywasaskedtodraft proposals “foranenergypolicydesignedtoculminateintheestablishment ofaCommonMarketforEnergy” (HighAuthority 1964a:73).Whilethe HighAuthoritygladlytookonthetask,theCouncilofMinistersdidnot acceptanyoftheproposalsissuedbytheHighAuthority(Haghighi 2007: 49).InthemeantimetheEuropeanenergymarketwasundergoingsubstantialstructuralchanges.
Twoofthesechangesoccurredinthe1960s.First,domesticcoalproductionbecamelesscompetitivebecauseoflowoilprices.Aperiodof extremelylowoilpriceswasenabledbymanynewoildiscoveriesinthe USandSovietUnioninthe1940sand1950s,thediscoveryoftheworld’s largestoil fieldinSaudiArabiain1948(Ghawar field)anddiscoveriesin Libyain1956and1959(Lujalaetal. 2007).Second,thememberstates becamemoredependentonenergyimportsfromthePersianGulfregion andtheSovietUnion.Oilturnedouttobemorecompetitivethancoalalso becauseofdecreasingcostsofshippingandtheSovietUnion’sentrance intotheoilmarket(Haghighi 2007).
Table2.1 depictstheshareofprimary energysourceconsumptionintheunionin1950,comparedto1960and 1970.Strikingly,coaldroppedfrom70%toonly22%by1970s,whileoil rosefrom12%in1950to59%by1970.Anongoingpost-wareconomic boom,whichledtosubstantialincreasesindomesticenergyconsumption, wasassociatedwithanincreaseinoilimportsby244%intheperiodfrom 1959to1968(EuropeanCommunity 1970:31).Anadditionalcontributor togrowingoilconsumptionwasthegrowthoftheEuropeantransportation sector.From1955to1965,thenumberofprivatecarsintheCommunity increasedfourfold(HighAuthority 1964b:42).
OnemightwonderwhyEuropeandecision-makerswerenotoverly concernedaboutthegrowingdependenceonoilsuppliesfromthe MiddleEastandtheSovietUniongiventheSuezCrisis.In1956,the SuezCanal,asoneofthemajoroiltransitroutes,wasclosedduetoongoing tensionsbetweenEgyptandIsrael,theUKandFrance.Lackofconcern couldbepartiallyexplainedbythecontractualstructureoftheoilmarketat thetime,aswellasbyarelativelystablepoliticalsituationinthemajor suppliercountries.Alreadyinthe1940s,themajorityofWesternoil
Table2.1 Totaldomesticconsumptionofprimaryenergy1950–1970.Data basedon(CommissionoftheEuropeanCommunities 1972a:2)
companiessecured “greatoildeals” withoil-producinggovernments (Yergin 1991:482).Andwhilethepost-warperiodwasgenerallyassociated withthe “ArabStruggleforIndependence” (ClevelandandBunton 2012), therewerenomajorconflictsintheoil-producingcountriesuntiltheSixDayWarof1967.ThecreationoftheOrganizationforPetroleum ExportingCountries(OPEC)in1960wasacrucialreactiontotheoil surplusandextremelylowoilprices,whichwerepartiallycausedbythe SovietUnion’sentrancetotheoilworldmarket.Yergin(1991:501) observesthatinthelate1950s, “RussianoilcouldbepickedupinBlack SeaportsatabouthalfthepostedpriceofMiddleEasternoil”.Tobalance exporters’ bargainingpowerafterthecreationofOPEC,thethenHeadof theDirectorate-GeneralofEconomicAffairsandEnergy(ECSC)suggested thatimportagreementsshouldbecoordinatedattheEuropeanlevel,but thisproposalnevermaterialised(Nora 1961:34).Thememberstates insteadagreedtoinvestinoilstocks:theCouncilDirectivefrom1968 obligedmemberstatestomaintain “atleast65days’ averagedailyinternal consumptionintheprecedingcalendaryear” (TheCounciloftheEuropean Communities 1968).Thismeasurewas,however,notsufficientinemergencysituationsliketheoneinstigatedbytheoilembargoof1973.
Thesecurityofoilsupplybecameamoreimportantissueinthelate 1960sand1970s,buttherewasnomajorbreakthroughinEuropean energypolicyintegration.WhentheNetherlandswasaffectedbytheoil embargoinOctober1973,theninememberstatesoftheEuropean EconomicCommunity(EEC)didnothingtodisplayunityinpractical terms,apartfromissuingajointcommuniquéduringtheCopenhagen Summitthefollowingmonth(AssemblyofWesternEuropeanUnion 1973).Onthecontrary,national – notEuropean –intereststookover, whentheFrenchandtheBritishdeclaredtheirneutralityontheMiddle Easternconflict,botheagertonegotiatebetteroildealsforthemselves (Laqueur 1974).Nonetheless,in1974,theCommissionandtheEC EnergyCommitteepreparedpolicyguidelinesrelatedtocoal,oil,electricityandnuclearsectors,withthemajorgoalto “gonuclear” by1985 (EuropeanCommunityInformationService 1974).Eventhoughmostof theseneverbecamebinding,the1970smarkanincreasedlevelofregulatoryactivityfortheCommission.Forexample,theCouncilDirectiveon minimumoilstocksfrom1968wasupdatedin1973(Directive73/238/ EEC)andpre-existingeffortstoinvestinnewsourcesofenergywere extended.Additionalbindinglegislationandinitiativesconcentratedon informationgatheringandimprovementsinenergyefficiency(European
CommunityInformationService 1979).FromtheCommission’ sperspective,themainreasonthattheCommunityfailedtoimplementa commonenergypolicywas “thediversityofsituationsinCommunity countriesandtheprerogativesguardedbyCommunitymemberstates” (CommissionoftheEuropeanCommunities 1979c:3).Amidstanumber oftheinitiativestocoordinateenergypoliciesinearly1970s,the Commissionnotedthat “thelackofacommonenergypolicycannotbe blamedontheCommunity’sexecutivebodies” (Commissionofthe EuropeanCommunities 1972a:6).
Theoildisruptionof1973didnotleadtomorecoordinatedenergy policiesbecausememberstatescouldcopewithoilsupply(in)securityby substitutingoilinelectricitygenerationwithotherfuels.Inthewakeoftheoil embargo,theCommunityexperiencedabouta1.5%decreaseineconomic growthanda3%increaseinthegeneralpricelevel(Commissionofthe EuropeanCommunities 1974:2).However,asharpincreaseinoilprices meantthatgasusedtogenerateheatandelectricitybecameincreasinglymore competitive.AsHelmutSchmidtcorrectlypredicted, “oilforheat-producing purposes[would]becomesubstitutableassoonasthepriceofoilequalsor exceedsthatofalternativesourcesofenergy” (Schmidt 1974:445).Concerns overoilsupplysecurityinthe1970scoincidedwithgrowingenvironmental concerns.Denmark,togetherwiththeUKandIreland,becamepartofthe EuropeanCommunityinthe firstroundofenlargementin1973.Apioneeringnationinwindenergy(Mendonçaetal. 2009)andanactivepromoterof renewableenergy,DenmarkcouldnowinfluenceEuropeandecision-making. TheUK,asanaturalgasproducer,certainlycontributedtotheshiftin interests,especiallygiventhatnaturalgashasoftenbeenframedasanenvironmentallyfriendlyfuel(Helm 2015).Nuclearenergy,naturalgasand renewableenergypresentedviablesolutionsthatwouldenhancesecurityof energysupplyandwoulddecreasecarbondioxideemissions.Whilethe attemptstoexpandnuclearandrenewableenergyproveddifficultinperiods oflowcoalandoilprices,naturalgas,whichwaspeggedtothepricesofoil, wasgainingpopularity,especiallyintheelectricitygenerationandheating sectors(CommissionoftheEuropeanCommunities 1972b).
2.2THE AGEOF GAS
ThedependenceonRussiannaturalgasimportsdidnotbecomeamajor concernuntilthelate1990s.Historically,naturalgasmarketsweredevelopedinregionswherecoalwasnotavailable,suchasRomania,Austria,
northernItaly,southwesternFranceandtheeasternregionsofinterwar Poland(Högseliusetal. 2013).In1959,theSlochterengas fieldwas discoveredintheNetherlands(Högselius 2012),atthesametimeasnew gas fielddiscoveriesinGermany,FranceandItaly.AccordingtotheEEC, Europeanreservesamountedto1,500billioncubicmetres(bcm)atthe endof1963(EuropeanEconomicCommunity 1965).In1966,the first pipelinescarriedDutchgastoGermanyandBelgium,whileFrance receivedits firstDutchgasin1967(Högseliusetal. 2013).Additional EuropeanreservesintheBritish,Danish,DutchandNorwegiansectorsof theNorthSeawerediscoveredinlate1960s(Högseliusetal. 2013). Algeria,aformerFrenchcolonythatgainedindependencein1962,was rapidlybecominganimportantoilandgasproducer(Yergin 1991:508). Whilemostoftheliquefiednaturalgas(LNG)projectsfromAlgeriato Europedidnothappenduetoongoingpoliticalinstability,acontractwas signedin1977toconstructasub-seapipelinecarryingAlgeriangasto Sicily(Högseliusetal. 2013).Giventhegrowingnumberofsuppliersand LNGtechnology,onecouldhavehopedthatthegasmarketwould becomecompetitiveinthefollowingdecades.Foranumberoftechnical andpoliticalreasons,thisdidnothappen,leavingonlyafewnaturalgas suppliersforthecommunity’sgasmarket.Mostimportantly,theEEChad torelyongassuppliesfromtheSovietUnion.
Itwasin1962whentheSoviets firstofferedtobuildagaspipelineto WestGermany,France,ItalyandAustria(TheMontrealGazette 1967). Sincethen,theSovietsandlatertheRussianFederationdevelopeda numberoflong-termgascontractswiththeWesterncountries. AlthoughNATOputanembargoonbiginchpipelinesalestothe SovietUnion(TheMontrealGazette 1967),theSovietofferwasmet withasignificantamountofinterestnotonlybecausethedealmeant accesstonaturalgas,butalsobecauseitenabledtheEuropeanstopromotetheirsteelindustry.Thisprovidedthestartingpointfortheso-called “triangularnaturalgasdeal” (Stent 2003:212)betweentheWestern countriesandtheSoviets:Russianswouldprovidenaturalgaswhilethe Europeanswouldtakecareofthepipelinesandprovidecreditforprojects atlowinterestrates.AustrianOMV’smajorlobbyingeffortin1966to bringitselfandthenationalsteelcompanyVOESTintotheSovietgas projectshowsjusthowlucrativethedealswerefortheailingEuropean steelindustry(Högseliusetal. 2013).Itwasthenin1968thatthe first majorgaspipeline “NorthernLights” fromtheSovietUnion(through Belarus)founditswayintotheEuropeanenergymarket,andthe first
Sovietgasstarted flowingtoAustria(Högseliusetal. 2013).Additional tradedealsweresupportedbyawaveofdétente.AsWillyBrandtcameto powerinWestGermanyin1969,sodidtheideaofusing “Osthandel” (EasternTrade)asthekeyto “Ostpolitik” (EasternPolitics)(Lippert 2010).WestGermanywouldbecomeoneofthemostimportanttrading partnerswiththeSovietsbyagreeingtonaturalgascontractsin1970, 1972and1974,amongothertradedeals(Gregory 1981).
Aftertheoilmarketsstabilised,aperiodofoilglutfollowedintothe late1980s.Oilpricesreachedrelativelylowlevelsagain.Thisdevelopmentremovedenergyconcernsfromthetopofthepoliticalagenda asmemberstatessawnoneedtocoordinateeffortsatthesupranationallevel(Commissionof theEuropeanCommunities 1995a).The ideaofcreatinganinternalmarket coveringallmembercountriesand functioningalongthesamelinethushadtobeputtorest.Even thoughWestGermanywasimporting25%ofnaturalgasfromthe SovietUnionby1980(Geddes 1980),itsigned,alongwithnine Europeancountries,anothermegagasdealin1981forthenext25 years.The “ Brotherhood” pipelinewasborn,whichAmericansperceivedasapossiblesecuritythreat(DirectorofCentralIntelligence 1983),andthefoundationforUkrainetobecomeanimportanttransit countrywaslaid.Followingthe “ triangularnaturalgasdeal” ,the GermansteelproducingcompaniesMannesmannA.G.andThyssen A.G.agreedtodeliver950,000tonsofsteelpipes(Geddes 1980 ), whichboostedthesteelindustryto welcomingcriesfromtheGerman SocialDemocrats(Gregory 1981).GermanandFrenchcompaniesalso suppliedcompressorstationsf orthepipeline(Tagliabue 1981).To calmdomesticcriticsworriedaboutthegrowingdependenceonthe SovietUnion,WestGermanyforcedtwodomesticmeasurestoavoid politicaldependence:acapontheRussiangasshareandthedevelopmentofgasreserves(NewYorkTimes 1981).In1981,WestGerman reservecapacityinundergroundtanksamountedto3bcm,butadditionalextensionswereplanned(Gregory 1981 :7).WhileWest GermanytriedtobalancethedependenceonRussiannaturalgas throughthemeasuresmentionedabove,manyobserverswererelieved whenNorwegiangasbecameavailablein1986(Tagliabue 1986 ).The Norwegianshareincreasedoverthefollowingyears,butsigni fi cant EuropeandependenceonRussiangas prevailed.TheKremlinallegedly viewedthe1981dealas “aColdWarvictoryagainsttheUnited States” (Högselius 2012:197).
Lackofalternativesmade “Europe’sBigGambleonSovietGas” (Karr andRobinson 1981)possible.Attemptstodeveloplinkswithtwoother possiblenaturalgasproducers – AlgeriaandIran – failed(NewYorkTimes 1981).Whilethe1975dealwithIranwasoffthetableaftertherevolution,Algeriawasnotconsideredasaparticularlyreliablesupplierafterit cutoffgassuppliestoFrancein1980toliftprices(Blumstein 1982). Additionally,AlgeriawaspressingforanewOPEC-styleorganisationof gas-exportingcountries(Lewis 1982),signallingitsdesiretoexertpoliticalcontrolovergasmarkets.TheEECcouldstillinvestmoreinnuclear expansion,butthisprovedtoberatherdifficultbecauseofthelimited numberofpossibleuraniumsuppliers.TheUSwasthesolesupplierof enricheduraniumfortheEuropeanmarketduringthisperiod,andthe EECwantedtopursuediversification.Astherewerefewuraniumsuppliersontheglobalmarket,EuropecutanotherdealwiththeSovietUnion, whichoffereduranium5%belowthemarketprice(NewYorkTimes 1973).TheSovietshadbeensupplyinguraniumtoFrancesince1971with “nopoliticalstrings” attached(Giniger 1971)andwereinnegotiations withSweden,FinlandandWestGermany.By1979,55%oftheenriched uraniuminWestGermanycamefromtheUSSR(Stent 2003:214). InsteadoffurtherincreasingtheirrelianceonMiddleEasternoiloron USorSovieturanium,theEuropeancountriesdecidedtodeveloptheir gasmarketsandincreasegasimportsfromtheSovietUnion.
WhiletheAmericanshopedtopreventstrategictradelinkstotheSoviet Union(DirectorofCentralIntelligence 1983),theeconomicreforms introducedbyMikhailGorbachevin1980sandtheeventualbreakupof theSovietUnionledtotheoppositedevelopment.TheEECwasadvocatingfor “acomprehensivecooperationandtradeagreementbetweenthe CommunityandtheSovietUnion” (EuropeanParliament 1988:10).A moreextensiveproposaltocoverenergycooperationwasthenproposed bytheCommissionin1990,arguingforexchangeofinformationand mutualco-operationtomodernisetheSovietenergysystem(Commission oftheEuropeanCommunities 1990a).ThesuddenSovietbreakupintensifiedtheEEC’seffortstoincludeRussiaintotheEuropeanenergyspace (formoredetailssee Sect.2.3).In1993,Russia,Germany,Polandand Belarussignedcontractstoconstructanewgaspipelinethatwouldsupply SiberiangastoWesterncountries.Surprisingly,Polandagreedtothisdeal withRussiainanattempttocircumventLithuaniaasagastransitcountry (MoscowNews 1993).Additionally,thepipelinemeantjobsandsome additionaldebtsettlementsforPoland(Guardian 1993).Through
the “YamalEuropePipeline”,Polandwastoreceive14bcmofnaturalgas by2006andhadtocoveronly15%ofconstructionexpensesofthe pipelinepartthatwentthroughPolishterritory(MoscowNews 1996). Germany,followingthewell-establishedprocedure,providedtheloans (FinancialPost 1995).
Intheearly1990s,theCommissionshowedaninterestinreviving commonenergypolicyeffortsthroughtheinstrumentsofliberalisation. ThisnewwavewasrelatedtotheadoptionoftheSingleEuropeanActin December1985(Padgett 1992:56–57),themajorgoalofwhichbeing thecompletionoftheinternalenergymarketbyDecember1992.It howevermetmuchmoreresistancethaninitiallyexpected(foradetailed overviewoftheEuropeanenergypolicyduringthisperiod,seeMatlary (1997)).Nonetheless,thenegotiationstakingplaceduringthisperiod wereinfluentialtothedevelopmentofEuropeangaspolicies.In1993,the Commissionrealisedthattalkingonlytomemberstateswasnotenough, thereforetheCommissioncontactedabroadrangeofstakeholders (energyproducersandconsumers)andpresentedaWhitePaperonenergy by1995.Inthisdocument,theCommissionemphasisesthat “gaswill competewithoilasaleadingcomponentofthefuelmix” andthat “Europeanconsumerswillbecomeincreasinglydependenton ‘grid’ suppliedenergy” (CommissionoftheEuropeanCommunities 1995b:12).A newapproachtodevelopinggasinfrastructurewasthereforenecessary. Already,in1993,theCommissionproposedaseriesofguidelineson trans-Europeanenergynetworks(COM(93)685).Concernsthatsome majorenergysupplierswerenotpoliticallystablejustifiedanewroundof talksforenergycoordination.Thehighunemploymentratepresented anothermajorconcernintheearly1990s,andtheCommissionsawan opportunitytocreatenewjobsbysupportingnewenergysectorsand developingendogenousrecourses(CommissionoftheEuropean Communities 1994:2).InitsseminalGreenPaperonEnergyPolicy, theEuropeanCommissiondefinedthecommunityobjectivesas “the satisfactionofallusers’ needsattheleastcostwhilemeetingtherequirementsofsecurityofsupplyandenvironmentalprotection” (Commissionof theEuropeanCommunities 1995a:5).Theresultofthiswaveofefforts wastheso-called fi rstenergypackage,whichisdiscussedinregardstothe gasmarketin Chap.4.Triplingoilpricesinlate1990smotivatedanew roundofdiscussionandculminatedinanewGreenpaperonenergyin 2000,whichultimatelyledtothesecondenergypackage.Finally,a renewedconcernoverincreasedenergypricesandpoorimplementation
ofthepreviouslegislationmotivatedthe2006GreenPaper,which resultedinthethirdenergypackageandmanysubstantialreforms (moredetailsonCommission ’sactivitiesarein Chap.4).
In2000,GazpromproposedanextensionoftheYamalpipelineto Poland,butPolandvehementlyrefused(MoscowTimes 2000).Thissuggestedthat,forPoland,thecostsofenergydependenceonRussiawere higherthananybenefitsassociatedwithanadditionalpipeline.Russia thereforestartedlookingfornewoptionstoincreasegasexportstothe well-payingWesternmarkets.UnabletomoveforwardthroughPoland, GazpromfoundanewgasroutebystrikingadealwithGermanyin2005 andlinkingRussianVyborgtoGermanGreifswaldthroughtheBalticSea andthereforecircumventinganumberofEasternEuropeancountries.This so-calledNorthernEuropeanGasPipelineprojecthasbeenheavilycontestedintheEuropeanenergydiscourse.Itwasoneofthe first “stresstests” ofEuropeansolidarityinthenewlyestablishedEurasianspace,withRussia underPutin’scontrolandmanyofthecountriesfromtheformerSoviet sphereofinfluencenowmembersoftheEUandNATO.WhenGermans andRussianssignedtheagreementtostartworkingontheNorthern EuropeanGasPipelinein2005,somePolishpoliticiansstampedtheproject asa “geopoliticaldisaster” (Bouzarovskietal. 2015).Poland’sministerof NationalDefenceatthetime,RadoslawSikorski,evenwentsofarto designatetheprojectas “Molotov-Ribbentroppipeline” (Högselius 2012).OneofthemostcontroversialaspectsofthedealwastheappointmentoftheformerGermanchancellorGerhardSchröderasthechairmanof theNorthernEuropeanGasPipelinecompany,whichwaslaterrenamedto NordStream(Kramer 2005).Aspreviouslydiscussed,Germany,andspecificallytheSocialDemocraticParty,supportedgasdealswithRussia becausethesedealswerenormallycoupledwithaneconomicboostfor thesteelindustry.Atthesametime,theEuropeanCommissionbackedthe projectandconsideredittobeanimportantelementtoenhanceEuropean energysecurity(IHSGlobalInsight 2008).ForRussia,thisprojectpresentedanopportunitytostartraisingenergypricesinthepost-communist space,particularlyinUkraine.Previously,thiswasnotpossiblebecauseall RussiangasdeliveriestoEuropeweregoingthroughUkraine.AndrewE. KramerfromtheNewYorkTimesspeculatedthat “when finished,the pipelinewouldhelpRussiaraiseprices[intheEasternEuropeancountries] withlessriskthatthosenationswillraisefeesforcrossingtheirterritory” (Kramer 2005).Additionally,aroundthetimeoftheNordStreamagreement,theYamalpipelinethroughBelarusandPolandwas finished.These
developmentsmighthavemaderaisingpricesfortheEasternEuropean countrieslessriskybecauseRussiadevelopedalternativegasroutesto Ukraine.TheresultwastheinfamousUkrainegascrisisof2006.
2.3RELATIONSHIPWITH RUSSIA
Twopertinentquestionsonemustaskarethese:howhasdependence onRussiashapedEuropeangassecurity?Andareanyconcernsthathigh dependenceonRussiangasmightendangertheEuropeansecurityof supplysubstantiated?ThebreakupoftheSovietUnionwasamajor challengeforallformercommunistcountriesandexplainstheproblematicenergyrelationshipsbetweenRussia,theformerSovietrepublics andevenWarsawPactmembers.Thet ransformationfromplannedto market-basedeconomywasstre nuous:Russiawaspushedbythe InternationalMonetaryFundandWorldBanktoraiseoilandgasprices tocompetitivemarketlevelsino rdertoreceivecreditsandloans (Bohlen 1992 ).WhilegascontractswithW esternpartnerswerelongtermandthuscouldbeeasilycontinued,contractsandpriceswiththe formerSovietrepublicsandWarsawPactmembershadtoberenegotiated.TheformerSovietrepublicshaddif fi cultiespayinghigherprices andurgedRussiatopostponegas-relatedreforms.Itwasthusnot surprisingthatUkraineexperiencedagascut-offwhenitsdebt amountedtoUS$1billio nin1994(AgenceFrance 1994 )orthatin 1995,gassupplywascutofftoLithuaniabecauseitwasunabletopay thedebtofUS$44milliontoG azprom(BalticNewsService 1995 ). Inthelate1990s,Gazpromwasundermountingpressure:allegedly threequartersofGazprom’ sgasweregoingtononpayingcustomers (CullisonandBahree 1999 :10).TheRussiangasmarketwasamongthe mostpressingproblems,ascashaccountedforonly20%ofitsincome andtherestwaspaidin “ chickenfeed,sprocketwrenches,meatsausages andothermanufacturedgoods ” (CullisonandBahree 1999 :10). Similarly,Ukraine,wh oseindustrywasheavilydependentonRussian energysupplies,haddif fi cultiesadjustingtohighergasprices.However, threatstocutoffgastoUkrainewer enotcredibleasitwastoopoliticallycostlytoimplementgiventhatallRussiangasexportstoEurope weregoingthroughUkraine.Gazpromthereforeinvestedanestimated US$24billionintobuildingYamalEurope(CullisonandBahree 1999 : 11),whichwouldcircumventUkraineandbringgastoEuropefrom BelarusandPoland(seealsothediscussionin Sect.2.2 ).
TheEuropeanCommunitystrivedtodevelopacomprehensiveenergy cooperationframeworkinthepost-communistspaceafterthebreak-down oftheSovietUnion,butitseffortswereonlypartiallysuccessful.Duringthe so-calledDublinsummitin1990,theDutchPrimeMinisterRuudLubbers proposedaEuropeanEnergyCommunitythatwoulduniteWesternand EasternEurope(AgenceEurope 1990).TheEnergyCharterTreatyof December1994grewoutofthisidea(NewYorkTimes1994),which wassignedby45countriesandRussia.However,Russianeverratifiedthe Charterandin2009stoppedtheprovisionalapplicationofthetreaty(Belyi 2012).Twoofthemaingoalsweretointroducemarketconceptsandto encourageinvestmentinEasternEurope(CouncilofEuropean Communities 1993).Throughthesemeasures,thelevelofcompetition wastoincreaseintheenergymarket.ToRussia,increasedmarketcompetitionwasaproblematicelement.Forexample,RussiadidnotwantCentral Asiancountries(withsubstantialfossilfuelreserves)tohaveaccesstoits pipelineinfrastructure(EnergyEconomist 2006).Allegedly,Russiaalsofelt thatitwasputundertoomuchpoliticalpressuretoratifythetreaty(Belyi 2012:2).TheEUthusapproachedaspecificagreementonenergywith RussiathroughthePartnershipandCooperationAgreement(European ExternalActionService 2016).
Inrecentmemory,Russia’sutilisationofgasasapoliticalinstrumentis Putin’sinvention(Balzer 2005).Butgasasabargainingchiphasbeen usedsinceMikhailGorbachev’stime.Forexample,to “convince” the Lithuanianparliamenttoreverseitsindependencelaws,Russiathreatened energysupplyinterruptions(Fein 1990).Especiallyintheearlyyearsof post-communisttransformation,BorisYeltsinusedenergydependencies ofthenewlyestablishedcountriesasa “carrotandstick” instrument.In thiscontext,Yeltsin’s 1993 BlackSeaFleetdealisparticularlystriking: UkrainewasofferedeithertopayUS$600milliongasdebtortorentout theBlackSeaFleettoRussia.TheheadoftheForeignAffairsCommittee intheUkrainianParliamentatthetimecommented: “weagreed[torent outthe fleet]inordertobepaidratherthanstartshootingguns” (Bohlen 1993a).ThegasdeliverytoEstoniawasinterruptedinJune1993asa reactiontothenewEstonianresidencylaw,whichwasconsideredunfair towardsethnicalRussians.Officially,thereasonwastheEstonianenergy debttoRussia,butYeltsinsignalledinaninterviewthat “Russiawillnot remaininapositionofindifferentonlooker[whenRussiancitizensare treatedinacertainway]” (Bohlen 1993b).Azerbaijan,Armeniaand Georgiawereexperiencingsomeofthemostfrequentgascut-offsduring
theirpoliticaltransformations(Högselius 2012:205).Gascut-offsare thusnotsomethingthatischaracteristicofPutin’s “era”;ithasbeen partofRussianforeignpolicytowardsEasternEuropeancountriessince thebreakupoftheSovietUnion.
WhiletheEnergyCharterTreatywasnotworkingoutasenvisioned,the EUestablishedtheso-calledEnergyCommunityin2005,whichwas extendedtothenewlyestablishedstatesinSouthEastEuropeinorderto improveenergycooperationinthepost-communistspace.Thisway,amore directexportoftheEuropeanenergyacquiswaspursued.Buildingonthe so-calledAthensMemorandafrom2002to2003,themajorgoalfor communitymemberswastoadoptrelevantEUenergyandenvironment legislation,andinreturn,getaccesstotheEuropeanenergymarket (EuropeInformation 2004).The firstroundofmembersthatjoinedin 2006includedAlbania,BosniaandHerzegovina,Kosovo,FYRof MacedoniaandSerbia(EnergyCommunity, 2016).In2007, Montenegrojoined,followedbyMoldovain2010(EnergyCommunity, 2016).ThepreparationsforUkraine’santicipatedmembershipstarted alreadyin2007whenGermanyinvitedUkrainetoconsidercooperating withthemintheenergysector(Ukrinform 2007).InMarch2009,Ukraine signedadeclarationwithBrusselsstatingthattheUkrainianGas TransmissionSystemshouldbemodernized(EuropeanUnion 2016a). ThecombinationoftheUkraineagreementsandtheeffectsoftheso-called “thirdenergypackage” (formoredetailsee Chap.4)ledRussiatofearthatit wouldlosecontroloveritsgasmonopolyinEurope(KommersantDaily 2009)andthatGazpromwouldbeforcedtosellgasattheUkrainianborder withnowayofcontrollingthefurthertransmissionanddistribution (BusinessWorldAgency 2009).Ukrainehasinitiatedanumberofimportant gasmarketreformssinceitsaccessiontotheEnergyCommunityin2011in ordertorestructureitsmajorgasoperatorNaftogaz,whichshouldleadtoa considerableimprovementofthetransparencyandefficiencyofthe Europeangastransit(KopacandBuschle 2014).
2.4IMPLICATIONSOF GAS INTERRUPTIONS OF 2006 AND 2009
Thegas flowinterruptiontoUkrainein2006presentedamajorpolitical shockfortheEuropeangasmarketsbecauseWesterncountriesalsofelt theconsequencesofthegascut-offsthistime.France,ItalyandAustria
reportedfallsinsuppliesbetween25and40%(BBC 2006).Whilesome arguedthattheinterruptionwasaresultofeconomicdisagreements (Stern 2006),otherssuspectedthattherewerepoliticalmotivationsto punishthenewpro-WesternUkrainiangovernment,asGazpromraised thepriceforUkrainefromUS$50perthousandcubicmetrestoUS$230 basicallyovernight(BBC 2006).Astheenergycommissioneratthetime AndrisPiebalgsconcluded,thisunrealisticrequestmadeitclearthat Ukrainewouldnotbeabletopay(BBC 2006).Mostimportantly,in December2005,Ukrainesignedamemorandumofunderstandingwith theEU,inwhichitcommitteditselftoeventuallyjointheEnergy Communityandtoliberaliseitsenergymarketinaccordancewiththe secondenergypackage(EuropeanUnion 2005).Theliberalisationof energymarketshascreatedanumberofproblemsbetweenRussiaand theEU(Lavrov 2013)andmighthavebeenthereasonbehindRussia’s growingconcernsoverthefutureofitsgasmarketinUkraine.
Russia’spossibleattempttostopthespreadofgasmarketliberalisation backfiredbecauseitunifiedtheEuropeanmemberstatesintheirattemptsto furtherintegratetheirgasmarketsthroughregionalliberalisation.Italso partiallymotivatednewgaslegislation,forwhichthegroundworkwaslaid outduringtheinformalEuropeanCouncilatHamptonCourtinOctober 2005(CounciloftheEuropeanUnion 2006).AsareactiontothedisruptionsinUkraine,theCommissionproposedthefollowingadjustments:the gasmarketwastobeliberalizedatafasterpace,aEuropeanEnergySupply Observatoryandemergencygasstocksweretobecreated(European Commission 2006a).Whiletheliberalizationofthemarketswaswelcomed inprinciple,theemergencystocksideawasmetwithcriticism.Forexample, theGasInfrastructureEurope(GIE)arguedthatgasstockswere “extremely expensiveandunnecessaryifawell-connectedandintegratedmarketwith diversesupplysourcescanbebroughtabout” (GASMTD 2006).Inamore in-depthCommunicationtotheEuropeanCouncilinOctober2006,the CommissionextensivelydiscussedhowtherelationshipwithRussiawasto behandledinthefuture(EuropeanCommission 2006b).Inthisdocument, theCommissionsuggestedthatthefuturepipelineswithRussiashouldbe accessibletothirdparties.Thisisthe firsttraceoftheso-called “Gazprom” or “third-party” clause(Brutschin 2013),whicheventuallybecamebinding throughtheDirective2009/73/ECafterthesecondUkrainecrisis.For obviousreasons(alsoextensivelydiscussedbyLavrov(2013)),Gazpromdid notparticularlywelcomethiscompetition-increasingelementofthe Europeanenergypolicy(Laitner 2007).
Overall,theUkrainecrisisof2006initiatedmoreseriousdebatesabout theEuropeanenergysecuritypolicy(moredetaileddiscussionin Chap.4). InMay2007,anetworkofenergysecuritycorrespondents(NESCO)was setup.ThemajorgoalofNESCOhasbeentocreateanearlywarning systemforpossibleenergydisruptionsthroughacoordinationbetweenthe EuropeanCommission,theCouncilSecretariatandthememberstates (EuropoliticsEnergy 2008)andto “helptheEUtospeakwithonevoice onthemostsensitiveenergyissues” (EuropeanCommission 2007a).Early on,NESCOoperatedundertheDirectorate-GeneralfortheExternal Relations(DGRELEX),andsince2010,theNESCObecamepartofthe EuropeanExternalActionService.Additionally,theGasCoordination Group,whichwasproposedin2004throughtheCouncilDirective 2004/67/ECandwhose “existencehadalmostbeenforgotten” (Agence Europe 2006),metforthe firsttimeonJanuary6,2006todiscussthe implicationsofthegasdisruptionstoUkraine.TheGasCoordination Group’smajortaskhasbeen “tofacilitatecoordinationofsecurityofsupply measuresatCommunitylevel” (EuropeanCommission 2006c)andits scopeofactivitieshasbeenconstantlyexpanded(see Chap.5).
Someobserverssuggestthatasareactiontodevelopmentsinthe Europeangasmarkets,Gazpromdevelopeda “divideandconquerstrategy” directedtowardsoldandnewmembersoftheEUwiththesupportof Russiangovernment.Forexample,in2007Sarkozy(theFrenchPresident atthetime)apparentlywasaskedtocallPutintodiscussgasmatters (Graham 2007).PutinwantedtoinformSarkozythatGazpromwas willingtoletTotal(Frenchenergycompany)get25%ofthesharesin theShtokmangas fi eldintheBarentsSea(Graham 2007) – aproject whichGazpromconsideredofthehigheststrategicimportanceforits LNGdevelopment(Gazprom 2013 ).Meanwhile,Gazprommoved aheadwiththeNordStream(agreementsignedinDecember2005) througharangeofhigh-levelmeetingswithGermanrepresentatives. GazpromalsoofferedItalylucrativebilateraldeals.InJune2007, GazpromandtheItalianenergycompanyENIsignedamemorandum ofunderstandingforSouthStream,whichwasbasedonastrategic cooperationagreementsealedinNovember2006(Gazprom 2007 ). This “ divideandconquerstrategy” targetedoneoftheweakestlinks withintheEuropeangassecurityarchitecture – thelackofcoordinationinnegotiatingbilateralenergydeals.
Inthepost-2006crisis,relationsbetweenUkraineandRussiaremained tense:anotherpricedisputewasbuildingupandculminatedinthecrisisof 2009.Whiletheoilpricecollapseinthewakeofthe financialcrisisindicated thatgaspriceswouldalsodroptoanestimatedUS$280perthousandcubic metres(Pugliaresietal. 2009),GazpromwasaskingUkrainetopayUS$450 perthousandcubicmetresontheeveofthecrisis(BBC 2009),while UkrainewaswillingtopayUS$235(Izundu 2009).Duringnegotiations, UkraineunsuccessfullytriedtousetheBlackSeaFleetContract,whichwas toexpirein2017,asabargainingchip(ItarTass 2008).ThefailednegotiationsresultedinmajorgasdisruptionstoEuropeinthemiddleofacold winter(broaderdiscussionispresentedin Chap.4).Whilethecut-offcanbe interpretedasadisplayofRussianeconomicmight,the2009gasdisruption toEuropewascostlyforGazprominmanyways.Theinterruptionofgas suppliesfor20dayscostGazprom,accordingtosomeestimates,US$1.1 billionindirectrevenues(Izundu 2009).Inaway,thetwoUkrainiancrises increasedgassecurityconcernsandmotivatedmorecooperationbetween UkraineandtheEU.InMarch2009,UkraineandtheEUsignedan agreementtomoderniseUkrainiantransmissionnetworks.Thismove upsetGazpromsomuchthatitissuedawarningtoUkrainianauthorities “thatanymodificationofitsgaspipelineswithoutMoscow’sapproval wouldaffectnaturalgasdeliveriestoEurope” (AgenceEurope 2009a). Additionally,aspokesmanfromtheRussianForeignministryaddedthat “RussiaconsiderstheEU’sdecisiontohelpUkrainetomodernizeitsgas pipelines[ ... ]an ‘unfriendlyact’” (AgenceEurope 2009a).Thisdidnot stoptheEuropeanCommissionfromgivingUkrainealoanofUS$1.7 billioninJuly2009tostoregasinreturnforfasterliberalisationofthe Ukrainiangasmarket(OilandGasJournal 2009).However,themajor UkrainianlawthatwouldensurecompliancewiththeThirdEnergy PackagewaspassedonlyinAprilof2015(Popovych 2015).
TheEU,yetagain,wentbacktoupdatingitsgaslegislationafter thesecondUkrainiancrisis.AndrisPiebalgs,theEnergyCommissioner atthetime,underlinedthat “thecrisishasdemonstratedthedeeplack oftransparencyingas fl owsandstrategicstocks” (AgenceEurope 2009b ).Thistime,thelegislationnotonlytargetedliberalisation (theso-calledThirdEn ergyPackage),butalsotransmissionnetworks andothergassecuritymeasures.TheEUpassedanewdirectiveongas marketliberalisation(2009/73/EC),anewregulationongas
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Sixteen tcs dry packed, 449 lbs each, marked weight 440 lbs each
Sixteen tcs dumped to smoke, actual weights
Pounds loss in storage
pcs 7,027
Smoked ninety-six hours, temperature 112° to 124° F
REGULAR KNUCKLES FOR SHIPMENT.
Eight tcs. dry packed 408 lbs. each, marked weight 400 lbs. each
pcs. 3,264
Eight tcs. dumped to smoke, actual weights 389 pcs. 3,190
in
Culls not smoked 1 pc. 4
Smoked ninety-four hours, temperature 112° to 128° F.
Glass Jar Beef.
—A great deal of dried beef is put up in glass jars under a vacuum, as well as in tin cans. Beef handled in this manner is cured by formulas given, but in smoking it is handled somewhat differently, being smoked less and dried more, it being necessary to have all the pickle and moisture evaporated from the meats to insure keeping.
After the meat has been handled as described it is generally put in smoke houses equipped with steam coils, the heat brought up to
110° to 120° F, and left to dry from three to four days. It then shows a shrinkage anywhere from 35 to 42 per cent. It is necessary to dry beef in this manner in order to make it keep satisfactorily when put in cans.
The following test will show the shrinkage of this product when smoked in the manner described above for canning purposes:
SHRINKAGE OF SMOKED DRIED BEEF HAMS
Thirty-two tcs. beef hams, four months old, weight to smoke 1,461 pcs. 12,542
Smoked weight 1,461 pcs 7,254
Shrinkage in smoking 5,287
Per cent shrinkage in smoking 42.15
Smoked eleven hours; temperature 112 degrees F.; hanging in house to dry, seventy-two hours.
Beef Trimmings.
—In the slaughtering of live stock in large numbers there is an accumulation of trimmings which has to be cured for the sausage room or canning department, as the case may be. The following formula will serve for the curing of beef, pork and sheep cheek meat and hearts, hanging tenderloins and other meats for sausage and canning purposes:
To 1,100 gallons of seventy-degree pickle dissolve seventy-nine pounds saltpetre. Use this pickle for the curing of beef cheek meat, pig snouts, pork cheek meat, sheep cheek meat, ox-lips, beef hearts, etc. This material is usually cured in vats and should be overhauled in five, fifteen and thirty days after being packed. If freezer space is available it is preferable to box it in convenient sizes and to freeze it, using it as a fresh product, when thawed.
Barreled Beef.
—Barreled beef, graded as described, in a previous chapter, is usually packed in barrels, using a plain pickle fully saturated. It is cured in the packages with a pickle of the following formula, for plate beef, rump butts, briskets, clods, and all trimmings of a similar character:
To 1,500 gallons of 100-degree strength pickle add ninety-eight pounds of saltpetre. It will be found necessary to dissolve the saltpetre before putting it into the pickle. Store in a cellar at 38° F. temperature. Repack with capping salt at time of shipment if for long exposure.
Tripe.
—Tripe is an article for which there is a large demand in the eastern states, comparatively little of it being consumed in other states, while there is not a very great foreign demand. It is made from the stomachs of cattle and is a very wholesome and nutritious dish. It is also being used extensively in sausage.
Cleaning Tripe.
—The stomach after being made empty is thoroughly washed in such a manner or with such devices as to permit of removing all manure from the inside surface. After it is thoroughly washed, put into a kettle, or vat, scalded, the temperature of the water being from 140° to 160° F. After a few minutes immersion the inside lining of the stomach may be easily removed. When sufficiently scalded it is scraped, leaving a clean, white surface. After scraping it is put into a vat and boiled for about three hours, or until it is tender. It is then put into cold water and chilled, the fat from the seams is removed and the “finishing process” begins, first scraping off all the loose fat with a sharp scraper and then removing a membrane on the outside of the stomach, which, when worked carefully, comes off, leaving the “tripe” perfectly clean and free of any fat, etc.,—the tripe being the muscular part of the stomach.
Pickling.
—It should first be put into a 45-grain vinegar pickle for ten to fifteen hours. After it has been submitted to the first pickling it is ready to be put into barrels and the vinegar in which it was first pickled should be strengthened with full-strength vinegar, making it again 45-grain, when it is packed in barrels and should be held in a temperature of from 45° to 50° F.
There is a remarkable gain in tripe if properly handled. A barrel of tripe packed at 135 pounds, at the end of three weeks, will weigh out 200 pounds and sometimes as high as 215 pounds. The tripe absorbs the vinegar, and it is essential in storing tripe that it be kept at a temperature so this absorption can take place, if it is kept in too
cool a temperature it will not take up the vinegar as it should, consequently the gain will not be found when the package is opened. The following test will show the gain in a barrel of honey-comb and a barrel of plain tripe, one barrel of each being packed in 45-degree vinegar and one barrel of each in 60-degree vinegar.
TEST PACKING TRIPE HOT DIRECT FROM FINISHING TABLE
One barrel honey-comb, 45-degree vinegar, 95 pcs. packed weight
for two weeks and unpacked,
One barrel honey-comb, 60-degree pickle, ninety-three pcs. packed, weight 125 Held in cellar for two weeks and unpacked, weight
45-degree
One barrel plain, 60-degree pickle, thirty-eight pcs. packed weight 125
Held in cellar two weeks and unpacked, weight
Drained on racks over night, weight
Temperature all pickle when put on tripe 65° F
Temperature cellar, from 50° to 52° F
Cost of Production.—The expense of saving tripe is shown in the following table illustrating the cost of 100 tripe, including packages and vinegar:
TEST ON 100 TRIPE FINISHED.
Cost per barrel, 135 lbs., $3.31 per cwt., fresh, loose, $2.51.
Green weight, 1,653 pounds; scraped, 1,333 pounds; cooked, 933 pounds; finished, 660 pounds.
CHAPTER XIX.
SHEEP AND CALVES
I P S P D P M
S G S R S D L P
M F — W I E — C — L
T — P L T — L T T —
S C H F .
Increased Production of Sheep.
—The increased consumption of mutton has been marked in this country in the last twenty-five years. Prior to that time, while there were many sheep raised, mutton, except in the large centers, was comparatively little used. The packers being able to obtain sheep in large quantities at live stock centers, and with their superior distributing facilities, soon created a demand for mutton at points where previously there had been little demand. As a consequence there has been a large increase in the production of sheep and consumption in this country.
It is a meat for which many must acquire a taste, but it is very healthful and nutritious. At the central abattoirs, where government inspection is in force, comparatively few diseases, or few diseased sheep, are found, this particular kind of live stock proving to be much healthier than either cattle or hogs.
—Sheep should always be kept in dry pens before killing, for if their fleece is allowed to become dirty, it is practically impossible to prevent the meat from becoming stained. Where the sheep get wet and muddy it is found of great advantage to hold them for a time in pens with two to four inches of dry sawdust on the floor, this sawdust having the effect of cleaning and drying the legs and under part of the body so that after slaughtering, when the pelt is removed, the meat may be kept much cleaner than otherwise.
Dressing by Piece Methods.
—The dressing of an individual sheep, “round dress,” as commonly performed is such a simple process that one would naturally ask why change.
In the economic use of labor about the modern packing house, probably no other department can show the benefit of modern methods to greater advantage than in sheep slaughtering. The effects of this division are first, economy, and second, better workmanship. It is natural that a man performing one particular operation day after day becomes more expert than if he were doing various kinds of work.
String Gang.
—Formerly sheep were slaughtered largely on a piece-work basis, one man dressing the sheep throughout. With the modern method each man does one particular part of the work, becoming very quick and expert in his line.
In Fig. 79 a string gang at work killing and dressing sheep is shown. A gang sufficient to handle 300 sheep an hour should have at least thirty-six to forty sets of hooks, or, in other words, facilities for working on thirty-six to forty sheep at one time on the dressing rails.
Sheep Ring.
—An early type of “sheep rings” is shown in the accompanying drawing, Fig. 80. The principles formerly in use are now modified to the extent that an endless conveyor is substituted for the stationary dressing beams, the output being increased. Some additional beneficial features are added, namely the use of a wheel hoist which is substituted for the friction hoist. In a space 80 × 32 feet in size, 2,000 sheep per day can be handled readily by means of the complete ring method. The sheep are hoisted with a double shackle, two at a time, and the work is continuous from there on until they are dressed, the sheep never touching the floor again, which means a great saving of labor over the old way of handling sheep by hand entirely. This diagram illustrates the different processes in the arrangement, it also gives height of rails, trucks, spreaders and hooks used on the different rails. Wherever a volume of thirty sheep per hour or over are being slaughtered a saving can be effected by adopting this method of handling.
FIG. 79. VIEW OF A “STRING GANG” AT WORK KILLING AND DRESSING SHEEP. CONVEYORS ARE NOW SUBSTITUTED.
FIG. 80. DIAGRAM SHOWING ARRANGEMENT FOR SHEEP KILLING AND DRESSING WITH “STRING GANG.”
In Fig. 101 is shown how the hogs are handled by means of a wheel hoist, two at a time, and hung on the sticking rail. Likewise where sheep are killed in large numbers, it is advantageous to hoist two at a time, the shackle being modified. The men shackling become very expert and can shackle two in practically the same time that they can one, and if a gang are running on a capacity of five hundred per hour, it will be seen that considerable time is gained by doing it in this manner.
Sheep Dressing.
—In the dressing of sheep the following suggestions will prove advantageous in turning out work with the
FIG. 81. WETHERS.
best results, whether the sheep are dressed by day work, one man dressing them throughout, or whether they are handled by a string gang.
Legging.
—This consists in opening up the skin around the legs and center of the body. In doing this work care should be taken that the skin be opened up as little around the necks and butts as possible, for wherever the skin is removed in the legging there is more or less stain on the meat, which it is impossible to wash off.
Pelting.
—In removing the pelt from the carcass care should be taken that the “fell” is not broken in any part, for wherever this is broken, the meat will show the effect of age, and will present a very unsightly appearance. The removal of the skin over the brisket is important.
Methods of Finishing.
—This is a part of the work which is very hard to describe, as the dressing at different points varies to such an extent that there are hardly two large cities where the methods are alike, especially in the case of lambs. Generally speaking mutton is “round dressed,” using no back sets and not using the caul. Lambs are dressed according to localities, some round dressed, same as mutton, others with double back sets and the caul on, others with single back sets and the ribs broken and still others with inside sets, in every instance the caul being left on. The photograph illustrates dressings for various American markets.
Washing and its Effect.
—When the mutton is run immediately into a well-built refrigerator where the proper circulation and temperatures can be maintained, there is no danger in using an excess amount of water in the washing. A wash cloth made of ten to fifteen thicknesses of very loosely woven cheese cloth quilted together, makes an excellent cloth with which to wash sheep. This, in connection with plenty of hot water, will give a bright and attractive appearance to the meat.
Good. Medium.
82. BUCKS. ROUND DRESSED SHEEP. INDICATING QUALITY.
FIG.
A, choice yearlings
B, medium yearlings
83
C, choppers
FIG
SHOWING ROUND DRESS AND LAMB DRESS CAUL ON
FIG 84 SPRING LAMBS SHOWING QUALITY NOTE “BOOTS ”
Where the dressed mutton is not run into a cooler, and outside air is depended upon for chilling, very little water should be used, the meat simply being wiped with a rag, made as heretofore described, dipping in hot water and wringing dry.
FIG. 85. “GENUINE” SPRING LAMB.
FIG 86 —EWES
Boston style sheep. Boston style lambs. Philadelphia style lambs.
FIG. 87. SHIPPING MUTTON AND LAMBS.
88 —A, PROVIDENCE STYLE LAMBS; B, CONNECTICUT STYLE LAMBS; C, GOATS.
FIG
FIG. 89. MUTTON AND LAMB CHOPS.
2, 3. Long saddle.
Short rack. 4, 5. Stew. 2, 3, 4, 5. Body.
FIG 90 A, MUTTON SADDLES B, MUTTON RACKS (Choice. Good. Medium. Common.)
FIG 91 VIEW IN SHEEP CHILL ROOM
FIG. 92. A, CHOICE CALVES. B, C, GOOD CALVES.
