Energy transit in the post-Soviet region
Energy transit in the post-Soviet region

Summary/Abstract: The post-Soviet transit system was developed on the basis of East-West energy trade in the previously bipolar world. It is underlain by the commercial ties between Moscow and West European states that have persisted irrespective of the collapse of the Soviet Union – in the case of natural gas, through long-term contracts. For West European energy companies, it was convenient to take delivery of hydrocarbons from the Russians at their own borders, leaving the issue of transit as a bilateral affair between Moscow and the transit countries involved. Almost all issues related to transit between Russia and transit countries were resolved under annual intergovernmental agreements. These agreements extended to shipment prices, import volume, quantities transiting, and methods of payment (cash, or generally barter). In practice these agreements were handled rather flexibly, and the actual trade was conducted at most according to the spirit of the agreements, rather than their literal terms. This lax policy of deal-making worked rather well while there was an abundance of natural resources, and while local industrial clans were satisfied with what they got. But from the mid-1990s onward, the situation changed.

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