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Faculty of Economics

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Ozawa, M.

Trust and European-Russian Energy Cooperation: The Case of Oil and Gas Partnerships and Long-term Contracts

CWPE1429

Abstract: This study argues that, in addition to political and economic factors, the level of trust between decision makers influenced outcomes in European-Russian energy cooperation. Drawing on selected cases of commercial partnerships and long-term contracts, it examines the impact of trust and the process by which it was developed or undermined between European and Russian partners. The findings are the following. Firstly, trust appeared to mitigate suspicion and encouraged cooperation between commercial and political actors. Secondly, when trust was present, conflicts of interest were more easily overcome while in its absence, a spiral of litigation and attempts at political coercion ensued. Thirdly, the development of trust was partially determined by history, collective memories and pre-existing political and economic conditions. At the same time, actors had the option to make decisions that could contribute to building trust or not. Fourthly, the analysis demonstrates a wide variation in levels of trust between West European companies and politicians toward Russia. And finally, it underscores the importance of interpersonal relations and energy companies as non-state actors. Because of the size and scope of these projects, the trust factor has implications not only on commercial ventures but also national economies, energy security and international relations.

Keywords: Trust, natural gas, oil, trade, cooperation, Europe, Russia, Germany, United Kingdom, networks, relations, long term contracts, European Union

JEL Codes:

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1429.pdf

EPRG Paper Link: 1409

Open Access Link: https://doi.org/10.17863/CAM.5849