The European Union energy security strategy towards liquefied natural gas : dynamics of state actors and multinational corporations in the LNG market

The European Union Energy Security Strategy

towards liquefied natural gas

Dynamics of state actors and multinational corporations in the LNG market

MSc Thesis Political Science: International Relations Research Project: The political economy of energy University of Amsterdam. Graduate School of Social Sciences

Amsterdam June 24th_{, 2016}

Author: Supervisor and second reader:

Boy Schmidt Dr. M.P. (Mehdi) Amineh

ABSTRACT

This thesis provides an analysis of the role and impact of LNG in the EU energy supply security, and the way in which multinational oil and gas corporations influence the position of LNG in the market and policy-making processes. The study therefore focused on concerns related to energy scarcity, geo-politics, and the environment. It furthermore emphasized on the global and EU LNG market developments and the role of both main LNG demand (UK, Spain, France, Italy) and supply countries (Qatar, Algeria, Nigeria). In order to measure the role of LNG in the energy security, the vulnerability of all EU LNG importing member states was measured by using several indicators related to among others dependency and diversification. Additionally, the multinational corporations were analysed focussing on infrastructural control, investment, trade, strategies, and their social network. The results showed that LNG is taking an increasingly role in the global and EU fuel mix and that both market and state actors highlight the importance of the fuel. This partly resulted from growing energy scarcity, geo-political concerns regarding Russia, and environmental issues. Furthermore, LNG was found to be an important indicator in the vulnerability of member states, as the main LNG importing countries were the least vulnerable and scored high on diversification. In addition, the multinational corporations have clear strategies towards LNG and remain extremely influential as a result of their infrastructural control, investment, trade, and their wide and dense social networks. It highlights the growing importance of LNG and the influential role of non-state actors in both the market and policy-making processes.

European Union – Liquefied natural gas – Dependency and diversification - Multinational corporations and strategies – networks – Energy Security – State actors and policy

ACKNOWLEDGEMENT

The completion of this thesis was not without any obstacles and the process learned me a lot about perseverance, discipline and the importance of doing research. I would like to express by gratitude to everyone who helped me during this process, I am really grateful for all the support. I specifically want to thank and express the deepest appreciation to my professor Dr. M.P. Amineh. His guidance, assistance, and strict yet positive approach really helped me to finish this master thesis in a good way. I furthermore want to thank my friends, in particular Merel and Tim, who spend quite some hours with me in the library, and really pulled me trough. I want to thank my family, in particular my mother, for her continued support and belief. And lastly, I want to thank the people who contributed to the research by sharing their knowledge and expertise, this was extremely useful.

Boy Schmidt 24th of June, 2016

TABLE OF CONTENTS

Abstract ... 3

Acknowledgement ... 4

Maps ... 7

List of tables and figures ... 10

Abbriviations ... 12

1 Introduction and research outline ... 13

1.1 Introduction ... 13

1.1.1 Objectives ... 14

1.1.2 Research question ... 15

1.1.3 Social and scientific relevance ... 16

1.1.4 Delineation of research ... 17

1.1.5 Literature review ... 18

1.2 Concepts and Theory ... 25

1.2.1 Liberalism in light of interdependence and globalization ... 25

1.2.2 European integration theories ... 27

1.2.3 Critical geo-politics ... 29

1.2.4 Energy security studies ... 30

1.2.4 Conclusion and integration of the theories ... 30

1.3 Brief argumentation and hypotheses ... 31

1.4 Research method ... 33

1.5 The structure of the thesis ... 34

2 The European Union and energy security developments ... 35

2.1 Introduction ... 35

2.2 Energy scarcity as a driver for global and EU energy security ... 36

2.2.1 The global picture of energy developments and scarcity ... 36

2.2.2 Energy developments and scarcity in the European Union ... 41

2.3 The geo-political context of securing natural gas in the EU: Russia ... 47

2.4 Environmental developments and considerations ... 51

2.5 Strategic policy approaches to secure and diversify natural gas supply ... 52

2.5.1 The European Union’s external and internal energy policies and strategies ... 52

2.5.2 The EU energy strategy towards LNG ... 54

3 Liquefied natural gas developments and associated state actors ... 57

3.1 Introduction ... 57

3.2 The evolution of LNG in the global and EU fuel mix ... 58

3.2.1 The emerging role of LNG in the global natural gas market and business ... 58

3.2.2 Developments of LNG infrastructure, trade, and investment in the EU ... 61

3.3 Policy and energy dynamics of the main demand and supply state actors ... 64

3.3.1 Energy demand dynamics and EU multi-level policy making processes ... 66

3.3.2 Dynamics of LNG supplying countries: potential and challenges ... 70

3.4 Conclusion ... 75

4 Natural gas and LNG supply vulnerability of the LNG importing member states ... 77

4.1 Introduction ... 77

4.2 The energy security indicators of natural gas and LNG ... 77

4.2.1 Natural gas and LNG ... 78

4.2.2 Dependency and diversification ... 82

4.2.3 Geo-political supply risk and infrastructural capacity ... 85

4.3 Analysing the security of supply by constructing a LNG and natural gas index ... 87

4.3.1 The effect of the indicators and the output of the analysis ... 87

4.3.2 The results and discussion of the PCA analysis ... 92

4.4 Conclusion ... 93

5 Multinational oil and gas corporations in the EU LNG market: Importance of supply

and network ... 95

5.1 Introduction ... 95

5.2 The importance of MNC’s in the supply of LNG to the European Union ... 95

5.2.1 State-market relation and dynamics ... 96

5.2.2 Infrastructural control, investment, and trade ... 99

5.2.3 Natural gas and LNG business strategies ... 102

5.3 Networks of corporate – corporate and corporate – state connections ... 109

5.3.1 Network analysis of Shell, Engie, Enagas, Eni ... 110

5.4 Conclusion ... 118

6 Conclusion ... 121

LIST OF TABLES AND FIGURES

Tables

Table 1 Population assumption per region 37

Table 2 Real GDP growth assumptions by region 38

Table 3 The global energy and natural gas consumption 39

Table 4 The global energy and natural gas production 40

Table 5 EU-28 key demographic and economic assumptions 42

Table 6 Natural gas imports from Russia to the EU 48

Table 7 The largest natural gas and LNG suppliers per country 82

Table 8 Diversity of the gas supply (Shannon-Wiener Index) 84

Table 9 Descriptive statistics 89

Table 10 Correlation Matrix 90

Table 11 Eigenvalues 90

Table 12 Component matrix 91

Table 13 Natural gas and LNG supply vulnerability Index and energy security indicators 92 Table 14 Overview key results interviews (related to state-market relation) 99

Table 15 Regasification terminals in demand countries 101

Table 16 Liquefaction terminals in supply countries 102

Figures

Figure 1 Gross inland energy consumption EU 44

Figure 2 Final energy consumption EU 44

Figure 3 Trends in electricity demand by sector 45

Figure 4 The major LNG trade flows in 2015 59

Figure 5 LNG regasification terminals in the European Union 62

Figure 6 LNG imports from Qatar (Mcm) 71

Figure 7 LNG imports from Algeria (Mcm) 74

Figure 8 LNG imports from Nigeria (Mcm) 74

Figure 9 Natural gas dependency per country 79

Figure 10 Total LNG imports per country (Mcm) 79

Figure 11 Share of LNG in natural gas imports per country 80

Figure 12 Share of LNG in gross inland consumption 81

Figure 13 Share of largest natural gas and LNG supplier in the total imports of that fuel 83

Figure 14 Shannon-Wiener Diversity Index per country 84

Figure 15 Geopolitical supply risk 85

Figure 17 Natural gas and LNG supply vulnerability Index 92

Figure 18 Importance and relevance of the MNC’s 102

Figure 19 Social network of Shell (Company ties) 111

Figure 20 Social network of Shell (Director ties) 112

Figure 21 Social network of Engie (Company ties) 113

Figure 22 Social network of Engie (Director ties) 113

Figure 23 Social network of Enagas (Company ties) 114

Figure 24 Social network of Enagas (Director ties) 115

Figure 25 Social network of Eni (Company ties) 116

Figure 26 Social network of Eni (Director ties) 116

Figure 27 Social network of the main companies and the sectors 117

ABBRIVIATIONS

AEEG Regulatory Authority for Electrical Energy and Gas

Bcm Billion cubic meter

BP British Petroleum

CIEP Clingendael International Energy Programme DECC Department of Energy and Climate Change EAP Environmental Action Plan

EC European Commission

ECT Energy Charter Treaty

EIA Energy Information Agency

EIT European Integration Theory

EU European Union

FD Financieel Dagblad

FDI Foreign Direct Investment GECF Gas Exporting Countries Forum GCCC Gulf Cooperation Council

GIC Gross inland consumption

GIIGNL International Group of Liquefied Natural Gas Importers

IEA International Energy Agency

IGU International Gas Union

IR International Relations

LNG Liquefied Natural Gas MLG Multi-Level Governance MNC Multinational Corporation

MT Metric Ton

NEEAP National Energy Efficiency Action Plan NOC National Oil Corporation

OECD Organisation for Economic Cooperation and Development PCA Principal Component Analysis

PCA Partnership and Cooperation Agreement SPSS Statistical Package for the Social Sciences

TNC Transnational Company

UK United Kingdom

1

INTRODUCTION AND RESEARCH OUTLINE

1.1 Introduction

Our current global system can be characterised as one of increasing globalization and

interdependency, growing populations and economies, and environmental concerns. All the above relates to the energy security of states, which is becoming an increasingly crucial concern for the EU1 and its member states. The energy markets are strongly interrelated with politics, both in formal (international law and organisations), and informal norms such as concerns over climate change, geo-political challenges, and the activities of state and non-state actors (Keating et al., 2012: 4). Europe faces numerous challenges related to this security of energy supply, especially the security of the natural gas supply.

Energy in Europe can therefore be characterised as being in the centre of the policy debate related to security of supply and demand, environmental concerns, access to investments and markets, energy trade and transition, competition and integration, and liberalisation versus national control of markets. It highlights the complexity of the energy market and political developments in the European Union. Natural gas is considered to be the transition fuel to the fossil free era, with a special focus on liquefied natural gas as diversification fuel. The European Union and its member states are

increasingly interested in strategies towards natural gas and liquefied natural gas in order to meet their objectives. Energy scarcity, geo-political concerns related to Russia, economic and environmental concerns are developments that are of great importance for the energy security of the EU. State dynamics related to policies, LNG market developments, and the influence and strategies of

multinational corporations explain the interrelationship of these actors and the effect on the natural gas security of the EU.

This study addresses both state and non-state actors, which is crucial when analysing energy security issues in the European Union. Since the 1990’s the role of multinational oil and gas

corporations grew tremendously as a result of liberalisation of the energy market. Therefore, this study does not view state actors as the only or dominant actor in energy governance, but recognized the influential role of non-state actors in EU energy developments and governance as well.

1

_{It is necessary to take into account the distinction between the EU member states and the EU institutions.}

When speaking about the EU, this will indicate both EU institutions and member states, if a specification is essential this will be specified.

1.1.1 Objectives

The objective of this thesis is to analyse the role and impact of LNG in the EU energy supply security, and in what way multinational oil and gas corporations influence the position of LNG in the market and policy-making processes. There is special focus on the EU energy security strategy towards natural gas and LNG in relation to the position and policies of the main LNG demand and supply countries. In addition, the role of multinational corporations in the LNG market in terms of strength and influence, related to infrastructural control, investment, trade, company strategies, and their network, will be outlined. As LNG is in a broader sense part of natural gas developments, natural gas as such will be part of this thesis as well.

The EU and its member states acknowledged the great difficulties that sometimes may arise from several energy challenges such as the great share of Russian natural gas. The commission has increasingly come to appreciate and highlight the importance of LNG. This move and strategy towards LNG is related to geo-political, geo-economical, and environmental issues, of which the state-society complexes are an important unit of analysis. Forces relevant in these developments are state and market actors, on which the analysis will be focused. Especially advanced liberal states, such as the EU-28, need to bargain with the market forces when it comes to energy security issues, as the corporate sector is not part of the state or government. Influential states in the EU policy making process are Germany, France and the UK. Yet, Germany does not have any LNG terminals or LNG demand, while France and the UK have. The main demand countries are therefore the UK, France, Spain, and Italy, getting their main supply from Qatar, Nigeria, and Algeria. Besides the state actors, the most relevant and influential multinational corporations trading and investing in LNG are; Engie, Shell, Enagas, Eni, Total, BP, ExxonMobil, and Nationalgrid. These states and multinational corporations interact with each other and are crucial actors in the energy security of the EU in relation to LNG.

This analysis will therefore incorporate the energy scarcity, geo-political, economic, and environmental dynamics around the energy security of the EU. As the importance of LNG will grow according to the strategy of the EU, a more thorough research is needed. In what way can this strategy be explained, what is the current status of LNG developments in the EU, and what is the role of LNG in the energy security of the EU LNG importing countries? But more importantly, what is the role of transnational and multinational private companies in this LNG market. Investment, trade, and strategies by these transnational and multinational companies are crucial for the energy security, and therefore the influence of these companies on the market and on policies cannot be denied.

In analysing the role of multinational corporations in LNG investment and trade, an overview of the LNG infrastructure is needed in both the main demand and supply countries of the EU. Besides, the (inter)dependency and diversification level of LNG in relation to the total gas supply is necessary to indicate the level of importance of LNG for the energy security of the EU and the importance of

multinational corporations in this process. The objectives therefore will be; (1) to analyse the origin and context of the current EU Energy Union Strategy towards natural gas and LNG as important transition and diversification fuel; (2) to identify the past and current global and EU developments on LNG and the state actors related to these LNG developments; (3) to measure the natural gas and LNG vulnerability of the EU LNG importing member states; (4) and lastly, to analyse the role of the multinational gas corporations (MNC’s) in the EU LNG market, emphasizing on investment, trade, company strategies, and their social network.

1.1.2 Research question

The objective outlined the main focus of this thesis, consisting of four objectives. Nevertheless, a tremendous amount of scholars has already analysed EU energy security issues, and also specifically the natural gas security. Many research was done regarding EU-Russia relations and the dependency on natural gas from Russia through pipelines. Yet, as the literature review will indicate, research on LNG and the role of MNC’s in the EU LNG market and policy making processes is limited and lacking. Therefore, this research will focus on both elements of energy security in the EU and the role of MNC’s in these processes, which leads to the following research question:

What is the role and impact of LNG in the EU energy supply security, and in what way do multinational oil and gas corporations influence the position of LNG in the market and policy-making processes, both in terms of (inter)dependency and network?

Dimensions that relate to this question are (1) the geo-political, economic, and environmental situation; (2) the LNG demand (UK, Spain, France, Italy) and supply state actors (Qatar, Algeria, Nigeria); (3) the level of (inter)dependency and diversification in terms of energy security and state vulnerability of the EU LNG importing countries; (4) and infrastructural control, investment, trade, influence, and social network related to the non-state transnational actors, the MNC’s (Shell, Engie, Enagas, Eni) in the EU. These indicators are reflected in the sub-questions of the main research question.

- Which developments are at the base of EU natural gas security and the related EU Energy Security Strategy towards LNG?

- What is the effect of the past and current global and EU LNG market developments and challenges on the position of LNG in the energy mix?

- In what way can the position of the main EU LNG demand countries be described in relation to the multi-level governance model, the LNG market, and their main suppliers?

(main import countries the UK, Spain, France, Italy and their main suppliers; Qatar, Algeria, Nigeria)

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1.1.3 Social and scientific relevance

The social relevance of this research stems mainly from the fact that the EU needs to secure its energy supply for its own survival in terms of economic prosperity and stability. The economy as well as individual households depend on the constant supply of natural gas, disruptions in supply highlight the importance of this even more. Furthermore, challenges related to energy scarcity, geo-political tensions and environmental concerns are growing in the EU, which stipulates the importance of the analysis. This in part have led to the growing importance of natural gas and LNG in the strategies of the EU and several strong western EU member states, indicating the significance and necessity of natural gas and LNG in the energy supply security. It is therefore crucial to analyse the impact of LNG on the EU energy security, especially since the focus of the EU is increasingly on natural gas.

Along with the social relevance is the scientific relevance, which will stem from the literature review, as this research will try to fill the gab within the existing studies. Placing the EU in the international context while emphasizing on the internal multi-level governance model is limited within research concerning the EU. Although research on EU policy-making processes is widely done, adding the aspect of energy security issues is not widely done. As the literature review will indicate, when EU natural gas security is analysed, the main focus is on natural gas and pipeline disputes. This research differs by the fact that, while emphasizing partly on Russia and Eastern-Europe, the main focus will be on liquefied natural gas and its main demand countries in Western and Southern Europe. It creates a new dimension of EU energy security issues, by focussing on both natural gas and LNG.

Adding to the above, to my knowledge, the vulnerability regarding natural gas and especially LNG of the LNG importing countries in the EU was not measured before. This means that for the first time the vulnerability of LNG importing member states with special focus on LNG indicators and the newest data will be measured. In addition, the role of the multinational corporations in the context of energy security of LNG will contribute to the existing literature. It will provide insights in their strength and influential role in the LNG market, based on infrastructural control, investment, trade,

the social network of corporations. This study will incorporate all indicators relevant in measuring the strength and influence of MNC’s in the market and policy-making processes, by focussing on a selective group of relevant companies. Emphasizing on all the indicators mentioned above, this research will provide an integral and extensive analysis, highlighting all relevant aspects and dimensions of the subject under study.

1.1.4 Delineation of research

Since European policy and strategies towards an energy union started around 2005, the overall time frame will be from 2005-2016, so roughly the past decade. Nevertheless, the time frame has some adjustments, since in analysing the long-term developments data will be used dating back to 1998. In addition, by virtue of limits in energy data the study was forced to focus on 2014 in analysing the energy security and vulnerability indicators for the LNG importing EU member states. The data from 2014 is still the most accurate and most recent data available, as reports of energy data often take some time to be formulated. Another adjustment are the strategies and social network of the MNC’s; the strategies will be outlined by analysing the most recent annual reports of the companies, 2015; and the social network will be analysed by emphasizing on the directors holding positions between 2010-2015. Nevertheless, the connections of directors five years before 2010 will be incorporated as well, which means this is in line with the 2005-2016 time-frame.

The geo-graphical space will contain the EU as a whole, as the European institutions made strategies relating to the EU as a whole with inclusion of all member states. Yet, the role of the main LNG import countries of the EU plays an even more crucial role in the context of this research, they consist of the UK, France, Spain, and Italy. The countries that import significant amounts of LNG will be incorporated in one particular section of the research as well, the principal component analysis (PCA), adding the Netherlands, Belgium, Portugal, Greece, and Poland. A clear distinction can be made between western member states with high LNG infrastructure and Eastern-European countries with less to none LNG infrastructure. Furthermore, in terms of geo-graphical space, the main LNG export countries are important as well, as they provide the LNG and because of their significant natural gas reserves (Especially Qatar).

This means that the main import countries, and thus the countries that benefit the most from LNG supply, are the UK, Spain, France, and Italy. The countries that are the biggest suppliers of these countries are Qatar, Algeria, and Nigeria. Especially Qatar is interesting, as this country has the largest growth potential for LNG imports (Cernoch et al., 2010). This is because of their immense natural gas reserves, stable production growth, and growing LNG infrastructure. Yet, according to Cernoch et al. (2010), Algeria and Nigeria will also remain significant producers of LNG to the European market, adding to the importance of these countries in the analysis. These producers are geographically the closest to Europe and therefore transportations costs are lower. In the context of LNG importing countries, the UK is an interesting country since it is the main importer of LNG from Qatar.

Furthermore, the UK and Spain are considered to be typical examples of laying emphasis on future development of LNG in the EU, which asks for a thorough analysis of these countries. In relation to the main LNG demand and supply countries, the main multinationals can be distinguished; Shell, Engie, Enagas, Eni, Total, BP, ExxonMobil, NationalGrid.

1.1.5 Literature review

This literature review will provide an overview of the existing studies on the subject under study. The literature was selected based on the conceptual themes and dimensions that are relevant for the analysis. In selecting the literature, the focus was on the most recent studies, although older literature was added to illustrate the overall historical picture. Most literature consists of peer-reviewed journal articles and books.

This literature review will first give an overview of the existing literature on energy security and energy scarcity, focussing on the distinctive approaches in conceptualising the concept of energy security. A review of the literature concerning the EU energy scarcity and energy security will follow. In addition, an overview of the literature concerning LNG studies on the global and EU level will be given. Lastly, there will be elaborated on the role of non-state actors (multinational corporations; MNC’s) in the field of market developments and politics, by emphasizing on their position within international relations (IR), their relation with EU politics, and the position of MNC’s in the analysis of social networks.

Energy security and energy scarcity: defining and conceptualising

Within the literature on energy security several scholars try to create a definition of energy security and emphasize on further conceptualization of this concept (Amineh & Houweling, 2007; Bauman, 2008; Biresselioglu, 2014; Chester, 2010; Jansen & Seebregts, 2010; Kruyt et al, 2009; Lefevre, 2010; Loschel et al., 2010; Sovacool & Mukherjee, 2011; Winzer, 2011). Some scholars conduct their own analysis of the existing literature on energy security in order to define and conceptualise energy security. Although these scholars have different approaches towards conceptualising the concept of energy security, they broadly conclude with corresponding findings.

According to Kruyt et al. (2009) there is no consensus on the precise interpretation of the concept energy security. They distinguish four dimensions that relate to availability, accessibility, affordability, and acceptability, and related indicators. Others, for instance Sovacool & Mukherjee (2011), state that energy security is a combination of five dimensions related to availability, affordability, technological development, sustainability, and regulation. They furthermore distinguish between relevant components and simple and complex indicators based on an extensive literature review, together with several other qualitative and quantitative analyses (Sovacool & Mukherjee, 2011: 5346-5353). The dimensions’ availability and capacity are absolute dimensions that can be

measured quantitative, while affordability and sustainability are more relative dimensions according to Chester (2010), who also conducted research on the conceptualisation of energy security. Furthermore, the concept of energy security has different specificities depending on the country (or continent), timeframe or energy source to which it is applied (Chester, 2010: 887).

Winzer (2011) and Loschel et al. (2010) state in line with the above that the term energy security has not been clearly defined and therefore hard to measure. Loschel et al. (2010) try to overcome this problem by looking into relevant indicators and the possible contribution of economics in order to structure energy security. In the study of Winzer (2011), a tremendous amount of ‘security of supply’ definitions were found in existing literature on this topic. The result of this analysis is that the common concept behind all energy security definitions is the absence of, protection from or adaptability to threats that are caused by or have an impact on the energy supply (Winzer, 2011: 41).

Other scholars use a different approximation, for instance Jansen & Seebregt (2010), who review several approaches, especially diversity-based indices and the Supply/Demand Index to measure the extent of long-term energy security and security externality valuation. The alternative approach Lefevre (2010) presents, focuses on gauging the causes of energy insecurity as a way to assist policy making. The paper specifies on the energy security implications of fossil fuel resource concentration and distinguishes between the price and physical availability components of energy insecurity. It defines two separate indexes: the energy security price index (ESPI), based on the measure of market concentration in competitive fossil fuel markets, and the energy security physical availability index (ESPAI), based on the measure of supply flexibility in regulated markets. Lastly, Biresselioglu et al. (2014) give insight in energy security by assessing the natural gas supply security of 23 importing countries and concluded that the most effective indicators for the measurement of supply security are the number of supplier countries, supplier fragility, and the overall volume of imported gas. They used the PCA (principal component analysis) method to calculate the natural gas supply index. In this research both energy security indicators related to availability and accessibility and the quantitative PCA analysis will be used to create a natural gas and LNG vulnerability index.

European Union energy scarcity and energy security

A considerable amount of scholars elaborated on EU energy security issues and the related integration of the EU on energy policies. Aalto & Temel and Eikeland looked into European integration regarding the energy sector, highlighting the complexity of EU legislation and strategies. Aalto & Temel (2014) analyse the informal institutions and dynamics of integration in the EU in the case of natural gas. They distinguish energy diplomacy, sovereignty, great power management, the market, and environmental stewardship as relevant elements. Other driving elements for integration are the interplay between states and transnational actors, the nature of binding forces, the materiality of energy resources and

distribution of power (Aalto & Temel, 2014: 767-769). They conclude that efforts of the EU to ensure its energy security depend on the wider European society of states and international actors. According to Aalto & temel (2014) there is a limited degree of integration as a result of the above mentioned actors and formal and informal institutions.

Other scholars, for instance Eikeland (2011), show that supra-nationalism gained a new foothold in the period between 2003-2009, with an independent will of the European Commission (EC). The study analysed the EC proposal for a third internal energy policy package by analysing the network of interest groups. The results show that companies continue to have influence on national governments (Eikeland, 2011: 258). Both studies show the existence of a multi-level governance model in which the EC is growing in importance while the national governments remain sovereign when it comes to national policies.

In addition, other scholars such as Kanellakis et al. (2011), present the implemented policies of the European Union in the broader field of energy and provide a picture of the Union′s strategy on energy related issues. Correlje and van der Linde (2006) investigate the European energy supply security and geo-politics in the context of two storylines. They argue that the challenges to the position of the EU emerge from a set of internal and external developments of geopolitical and economic origin. Costantini et al. (2007) analyse the projections on increasing European external energy dependence and vulnerability. They pose the main risks on the long-term; risk of collusion among exporters; and risk of demand/supply imbalance. The most effective policies at the international level seem to be cooperation with exporting countries, enhancing investments in production capacity, and with developing countries in order to reinforce negotiation capacity of energy-importing countries (Costantini et al., 2007: 210).

As this research will be focused on natural gas and LNG, studies specifically related to natural gas need to be incorporated as well. Fernandez and Palazuelos (2014) analyse the evolution of the EU gas model, by emphasizing on the main players (countries and companies), the scenarios, and exchange mechanisms. They use the British School of IPE as a theoretical background, with special focus on the relational and structural power of political bodies (states) and economic bodies (TNC’s). They conclude that the EU reforms seeking to break the dominant power of the large incumbents did not have the entirely desired outcome. Instead, the core of power relations, based on two interrelated oligopolies of export and import companies, is deeply consolidated within the gas cycle. This is in line with the theories that will be presented regarding the influential role of Multinational Corporations (MNC’s).

Many other scholars also emphasize on specifically gas, as Reymond (2007) re-examines the geopolitical key issues related to natural gas as well as the uneven distribution of natural gas resources on a worldwide scale. He proposes the significance of liquefied natural gas in gas exchanges and analyses the problem of European gas vulnerability using several indicators. Bilgin (2011)

economic and policy uncertainties into meaningful scenarios. He implements ‘‘trend analysis’’ to forecast the volume of gas needed until 2020 by elaborating the estimates of the EU Commission and ‘‘scenario building’’ to come up with alternative futures forging different regional implications. In another study Bilgin (2009) addresses issues of natural gas which raise questions about European energy security. He highlights the rising gas demand and dependency on Russia, and the incentives and barriers of Europe’s further cooperation with Caspian and Middle Eastern countries.

Besides qualitative studies, some scholars use models and quantitative analyses to explain the EU energy security. Holz, Hirschhausen, & Kemfert (2008) presented a model of the EU natural gas supply, which focuses on the natural gas exports to the EU (upstream market) and the internal EU trade (downstream market). In their analysis they found that the EU natural gas market can at best be presented by the ‘Cournot scenario’, in which exports from some traditional suppliers to Europe (Russia, Algeria) decrease while newly emerging exporters (Qatar, Nigeria) gain market shares. However, the results furthermore present that the supplies to Europe are more diversified, with newly emerging (LNG) exporters gaining market shares in Europe (Holz, Hirschausen, & Kemfert, 2008: 785). This indicates that at the time of their research, other factors were at play determining the supply relations in the real world (e.g., long-term contracts, destination clauses, etc.). It seems the selected exporting states are in line with the existing literature regarding their importance in supplying natural gas to the EU.

Le Coq and Paltseva (2009) introduce separate indexes for oil, gas, and coal, designed to evaluate the short-term risks associated with the external supply of energy to the EU Member States. They combine measures of energy import dependency, energy import diversification, political risks of the supplying country, risk associated with energy transit, and the economic impact of a supply disruption. Their findings show that individual states’ levels of risk exposure differ both across energy types and among EU Member States, with possible implications for the EU common energy policy (Le Coq & Paltseva, 2009: 4481).

The LNG market and developments

The significant role of LNG in the international energy and gas market has evolved increasingly in the past decades. According to De Jong et al. (2010) LNG is regarded as the major potential game changer, as a result of further globalization of the gas business, with different market structures, more fragmented value chains, more flexibility in supplies to markets, and short-term contracts. The literature concerning natural gas and LNG market developments are mostly related to the field of economics rather than political science. Nevertheless, these articles can provide relevant conclusions about the developments in the market which are relevant for the political environment.

Several scholars and reports study the role of LNG in the world gas market, by emphasizing on issues such as gas prices, gas technology, and other gas market developments (Brito & Hardly,

2007; De Jong et al., 2010; Egging et al., 2009; Jacobs, 2011; Kumar, 2011; Maxwell & Zhu, 2011; Wood, 2012). Other scholars, such as Cernoch et al. (2010), Hauser & Most (2015), and Lise et al. (2008), focus on the security role of LNG in Europe. Again others analyse the infrastructural and regulatory basis of LNG (Dorigioni & Portatadino, 2008; Pierru et al., 2013; Molnar et al., 2015), and the role of LNG in the liberalization of the gas market (Dorigioni et al., 2010).

Wood (2012) addresses several important market developments and states that the EU is becoming increasingly dependent on external natural gas supplies and that LNG is destined to play a key role in this supply. Although Asia continues to dominate the global LNG trade, the EU LNG market has involved significantly and will continue to grow (Wood, 2012: 27). Maxwell & Zhu agree with the notion of the growing importance of LNG in the fuel mix. They add that natural gas prices are expected to be an important determinant of LNG imports (Maxwell & Zhu, 2011: 217). Additionally, Molnar et al. (2015) highlight the strategy of the EU to diversify its supply as a result of energy security concerns. According to their report, the current market dynamics could support the EU diversification towards LNG (Molner et al., 2015: 1).

These energy security concerns are highlighted by Cernoch et al. (2010) as well, concluding that LNG plays an important role in the energy security of the EU and will gradually strengthen in time. Yet, in this time it cannot be a substitute to Russian pipeline gas.Hauser & Most (2015) show that LNG, in this case together with shale gas, has an effect on the diversification of gas supply, but the effect is quite limited and main European gas suppliers, especially Norway and Russia, will still remain dominantly in the European gas supply.

After analysing several scenarios for the gas security of the EU, Lise et al. (2008) conclude that substantial investments in gas transport corridors are needed to deal with the growing demand. 40% of the investments will need to be directed to the LNG train (Lise et al., 2008: 1905). Yet, despite the growing capacities of LNG, the pipelines are expected to remain the dominant means of gas supply/transport, which is in line with the findings of the other scholars. Furthermore, long distance LNG is mainly providing the extra production in the case of Russian disruptions.

The role of non-state transnational actors

In the field of the political economy the role of non-state transnational actors in global and national politics is widely analysed and determined. Traditional scholars in this field are Strange, Cohen, and Gilpin, on which will be elaborated further under theory and concepts. More recently several scholars describe the role and influence of MNC’s in politics as well (Andrade & Oliviere, 2015; Detomasi, 2014; Egging & Gabriel, 2006; Eising, 2004; Gullberg, 2008; Miard, 2014; Rondinelli, 2002; Scherer et al., 2006; Warntjen & Wonka, 2004).

According to Andrade & Oliviere (2015) the private sector is able to play a key role in energy and climate governance due to the multi-stakeholder participation in decision-making processes. They

are influential in shaping negotiations and implementation of legislation for their own interest (Andrade & oliviere, 2015: 386). Detomasi (2014) places MNC’s as political actor in light of capitalism and globalization. His main finding is that the decision making of independent MNC’s is determined in part by the political preferences and institutional structures of the home country (Detomasi, 2014: 697). This indicates a strong interrelationship between MNC’s and their country of origin.

When specifically looking into the literature concerning the EU, Palazuelos & Fernandez (2012) give insight in the importance of transnational companies (TNC’s) in the supply of fossil fuels (in this case oil) to the EU. They analyse the positioning of EU and American TNC’s in the supply of oil from outside Europe to European countries. They conclude that the companies are increasingly important in the supply of energy and have larger market shares than the national companies. Additionally, Miard (2014) and Gullberg (2008) illustrate the lobby strategies of MNC’s, highlighting the influential role of business interest groups in the EU policy making process by exchanging information and expertise. MNC’s mainly focus on the European Commission (EC) in influencing the policy making processes (Gullberg, 2008: 2971).

Other scholars analysed the social network of corporations, indicating the density and therefore amount of cooperation between and influence of MNC’s(Burris & Staples, 2012; Carroll et al., 2003; Carroll et al., 2010; Dahan, 2006; Faccio, 2006; Graaf, 2012; Heemskerk, 2011; Heemskerk, 2013; Heemskerk et al., 2016; Hillman, 2005; Nollert, 2005). Most studies are focused on the growing global network of elites, using the method of interlocking directorates. Caroll et al. (2010) found that the transnational European network strengthened over the past decades, with a decrease in the national networks. Their findings indicate that the network of bankers became less dominant, while the core of the European corporate community is formed by industrialist with financial connections (Caroll et al., 2010: 811). The study of Heemskerk (2013) is in line with Caroll et al. (2010), as he illustrates the growth of the EU corporate elite network in terms of strength and magnitude. The network is wide and the number of directors in the network is growing.

Regarding global networks, de Graaff (2012) interestingly found that the increased cooperation between the western private MNC’s and the non-western state-owned companies did not lead to an increased integration of the elite networks. Which indicates that the networks remain mainly regionally, something the findings of Burris & Staples (2012) underline.

Conclusion of the literature review

After the review of the existing literature on energy security, EU energy security, LNG market developments, and the role of multinational corporations, several conclusions can be drawn. All studies on energy security focus on the availability of resources to describe energy security, which relates to the energy scarcity model of Amineh & Houweling (2007). Furthermore, the concepts

described by Sovacool and Mukherjee (2011), ‘security of supply and production’, ‘dependency’, and ‘diversification’, are highly relevant for this research. Together with the concepts of ‘availability’ and ‘accessibility’, this will be a basis for analysing energy security with several related indicators. This research will therefore further deepen the concept of energy security by analysing the EU energy strategy towards LNG and the role of multinational companies in this process. Energy security indicators will be used to measure the natural gas and LNG supply vulnerability of the main LNG importing countries in the EU. The special focus on LNG will add up to the existing literature on energy security and will provide new insights in the natural gas security of supply of the LNG importing member states.

In the literature concerning EU energy security the scholars give great insight in the developments of the EU energy market and policy processes. It seems that several concerns related to scarcity, geo-political tensions, and environment are highly relevant for the energy security of the EU. Furthermore, several important supply countries were described and will be used in this analysis as well. Natural gas plays a vital role in the energy security literature on the EU, with growing interest for LNG energy security. Yet most literature remains concerned with the role of Russia and Eastern-European countries. This research will, in line with the existing literature, emphasize on the important concerns related to the EU energy scarcity, including Russia. The contribution to the existing literature consist of a focus on LNG and on the western and southern European countries. Most literature on LNG in Europe is from recent years, which means that research in this field is relatively new and therefore open to new approaches and more research on this topic.

Regarding the literature on non-state actors (multinationals) in the international field of politics, traditional studies focus on the role of multinationals in de globalizing world and in relation to developing countries and their dependency. The role of multinationals is therefore traditionally mainly analysed in relation to global developments and much less within EU politics or in relation to EU energy security and LNG. More recent studies highlight the importance of MNC’s in the energy supply towards Europe and their growing network, which leads to more influence. It is clear that most of the literature distinguishes between state and market actors and that both actors influence the outcomes of the policy-making process.

In this study I will further elaborate on the role of these multinational corporations by analysing their LNG infrastructural control, investment, trade, business models, strategies, and network. This research will fill this gap by emphasizing on the natural gas and LNG supply vulnerability of LNG importing member states and on the role of multinationals in relation to the LNG developments and energy security of the EU. In this way several approaches that contribute to this research are outlined, and a research question can be formulated.

1.2 Concepts and Theory

In the ‘real world’ one cannot fully understand and describe social, political, and economic phenomena because of their high level of complexity. Within the academic field of international relations (IR), theoretical frameworks are crucial in order to grab the complexity of the phenomena and study them. IR is known for its so called ‘great debates’ between several grand theories explaining global political phenomena. In the past decennia and especially after the cold war, growing interconnectedness and the process of globalization led to critical reactions towards the traditional state-centric approach of realism. Liberalism and Marxism, as domestic society schools are best known for their critical few towards realism. More recently is the upcoming notion of the importance of ideas and norms, formulated by the constructivist approach.

As the main unit of analysis in this thesis are states in a European context, and multinational corporations (MNC’s) in a European and global context, liberalism will be used as a basis for understanding the interaction between these actors in the energy market. The behaviour of the single member states and MNC’s can only be described by addressing the European Union as a political entity as well. Nevertheless, the European Union is an extremely complex political entity to study, which asks for additional theories to explain the interaction between member states and the supra-national level of EU governance. Therefore, this study will emphasize on European integration theories to clarify EU political complexities and the interaction between the supranational level in the form of the European Commission and the member states.

In this study energy issues and economic market developments and considerations play a vital role, which means additional theories are needed to explore and analyse these matters. Although the role of non-state actors, in this case MNC’s, will be addressed under liberalism, political economy scholars have more recently gave insights in the behaviour of MNC’s and their consequences. Therefore, views and assumptions concerning MNC’s within the context of the political economy will be given as well. Additional, in understanding the energy issues the EU and its member states are facing, critical geo-politics and energy security studies will be added. Critical geo-politics and energy security studies in general emphasize on the importance of securing the supply of energy, which is the main problem and basis of this study, adding to the importance of these approaches.

1.2.1 Liberalism in light of interdependence and globalization

Interdependence and globalization are concepts that emerged in respectively the ’70 and ’90 of the 20th century, trying to explain the growing interconnectedness of states and other actors. Keohane and Nye, liberal scholars, emphasized widely on the concepts of interdependence and globalization. They describe interdependence as a condition or state of affairs, and globalization as the increase of globalism, which is the state of a world involving networks of interdependence at multicontinental distances (Keohane & Nye, 2000: 105). Globalism furthermore refers to global networks of multiple

relations or connections, which therefore does not include regional networks. The contemporary fast process of globalization leads to increased density of networks, increased institutional velocity, and increased transnational participation (Keohane & Nye, 2000: 108). Interconnections between states and global economies are growing, with intensive economic interdependence affecting social and environmental interdependence as well (Keohane & Nye, 2000: 109).

Within IR the main focus is on societal interdependence, referring to the social actors (often governments) that are affected by the behaviour of other actors (often other societies) (Keohane & Nye, 1977). One of the most referred domains of globalization is economic globalization, the process towards a more integrated world market. In this process MNC’s play a central role, as they are the main agents of transnational trade and production, which especially accounts for the energy sector. As a result of this economic globalization, nation-states experience difficulties in meeting their governance targets and in controlling the markets.

In line with the processes of interdependence and globalization is the growing importance of non-state actors in the domain of domestic and global politics. It is, in contrast with realism, liberalism that pays special attention to the influential role of non-state actors, while accepting that the system of sovereign states will remain the dominant structure. Liberalism, explained by Keohane and Nye (1977), gives insights in the analysis of IR with acknowledging the important role of non-state actors, referring to international relations as ‘regular interactions across national boundaries when at least one actor is a non-state agent’. Besides insights in the role of non-state actors, liberalism mainly offers insights in cooperation and integration, and in transnationalism and interdependence. Liberalism emerged as a reaction to the dominant paradigm realism, emphasizing on the growing role of non-state actors next to the existing sovereign nation states. In addition, liberalism criticized the state centric approach of Realism and depicts that a multiple variety of political actors are essential in the analysis of international relations. The non-state actors, in this case transnational actors in the form of MNC’s, influence the international system and therefore need to be studied in analysing international politics and markets.

The field of the political economy elaborates even more on this influential role of MNC’s. Scholars mainly emphasize on the role of non-state actors and the control of governments over trade and the financial market. Most non-state actors in this field can be characterized as interest groups, entities with their own preferences and goals, leading to certain strategies towards the market, states, and other non-state actors. The interests and motivations of the non-state transnational actors differ as, in comparison to NGO’s, MNC’s will mainly be driven by instrumental goals promoting the well-being of the organisation itself (Risse, 2007: 264). Risse (2007) furthermore argues that transnational actors such as MNC’s clearly left their mark on the international system and that their influence remains significant. Strange (1986; 1944), Cohen (1981;1986), and Gilpin (1987), are among the first scholars that analysed the growing role of markets and non-state actors as a direct challenge to the authority and capacity of governments (Cohen, 2008: 556). Furthermore, the non-state actors play an

essential role in the global trade flows that increased due to globalization and liberalisation of the economy.

An important hypothesis within theories regarding MNC’s is the ‘convergence hypothesis’, which states that the authority of the governments of all states, has been weakened as a result of technological and financial change and of the accelerated integration of national economies into one single global market economy (Strange, 1996: 14). The role of MNC’s is significant in these processes, as they are able to shift production and allocate financial and other resources, challenging the autonomy of national governments. According to Keohane and Nye (2000) governments tend to liberalize their economies as a result of the integrated global markets. Moreover, the strategies of MNC’s do not only have effect on governments, but influence other transnational actors as well, including banks, trading unions, and relational corporations.

Nevertheless, although it seems MNC’s clearly influence governmental policy-making processes, governance is increasingly characterized by cooperative partnerships between governmental and transnational actors, such as MNC’s. Keohane and Nye (1977) state that national governments more often choose to bargain, form coalitions, or alliances with transnational actors, since the costs of national governments of winning confrontations with these transnational actors has risen. The interconnectedness seems to result in a mutual dependency between international actors, which is especially the case within the EU due to the process of regionalization.

Regionalization is often used to refer to ‘the growth of societal integration within a region and, the often undirected processes of social and economic interaction’ (Hurrell, 1995: 39). The process of regionalisation leads to an increase in interdependence and could intensify common interests and identity. The formation of a region with a common identity and interests could shape foreign policy of the region towards other states or regions. Furthermore, the transnational relations in the region will become increasingly dense, leading to the creation of common economic interest. The process of EU regionalisation can be described by European integration theories (EIT).

1.2.2 European integration theories

The European Union is an excellent and unique example of regionalization. And as the EU will take a central role in this analysis, insights in its complexity are needed. When it comes to interactions between states and security issues, liberalism in contrast to realism, does not have the assumption of a zero-sum game, but rather an assumption of mutual gains resulting in cooperation. It is therefore liberalism which can explain the growing cooperation and integration of the European nation states in the past decades. Yet, as the EU is a unique phenomenon in the world, several European integration theories (EIT) emerged out of liberalism to explain the process of regional integration.

There exists a myriad of theoretical approaches towards European integration, of which many have divergent approaches in analysing this integration. Therefore, within European integration

studies, a distinction can be made in the theoretical debate between the ‘grand integration theories’, and later in time the ‘middle range’ theories. Initially, the studies on EU integration could be defined as the debate between the neo-functionalist, for instance E. B. Haas, and intergovernmentalists such as S. Hoffman and A. Moravscik (Rosamond 2000: 98-112). The main question in this debate concerned whether the supranational institutions or the member states were the main actors forcing the EU towards more integration.

Neo-functionalism sees integration as the process of created institutions as drivers for further integration even if this was originally not the aim. Neo-functionalism shares quite some traits with realism, especially the self-interest oriented approach (Rosamond 2005: 238- 2). Yet, the focus on the growing power of institutions and interdependence, seems to indicate a strong liberalist approach. Neo-functionalism furthermore views three mechanisms as a driving force of the integration process; positive spill over, transfer of domestic alliances, and technocratic automaticity. The supranational actors became more influential as a result of the shift of loyalty from the national level to the new regional centre (Rosamond 2000: 65-68). Different non-state interest groups will peak their interests and approach to the new level for support (Rosamond 2005: 243-4). This will create pressure from interest groups to integrate politically, because they want to influence policy at the highest level possible (Rosamond 2000: 62-63).

Instead of the predicted EU integration as a result of automatic spill-over of competencies, intergovernmentalism states that it is a result of national surrendering of power through interstate bargains (Rosamond 2000: 59-61). Intergovernmentalism further criticise the neo-functionalists for the continued dominance of the national state and of the national interests. They argue, for instance Hoffman, that the state still plays an important role in the external policies and that neo-functionalism ignores the wider concept of the integration and should take the international context in consideration as well (Diez & Wiener, 2004: p. 51). Although intergovernmentalists acknowledge that there exist a variety of non-state actors influencing policy, the states still play an essential role in the policy-making process as a result of their legal power.

After these grand theories a governance turn emerged in the ‘90’s, who refused to analyse the integration process solely by using neo-functionalism or intergovernmentalism. The focus of these main governance approaches, multi-level governance, new institutionalism, and differentiated integration, shifted towards an analysis of EU governance as one of its kind. Multi-level governance (MLG) acknowledges the nature of EU institutions together with the role of the single nation state, and therefore the complexity of the EU decision making processes (Rosamond, 2007: 128). Typical for this approach are the three assumptions stating; decision makers and governments approach more than one level to influence decision making; the functional tasks overlap geographical borders; EU cannot provide overlapping functional jurisdictions. As a result, the overlapping geographic structure of actors and functional tasks makes it difficult to impose one level of governance on the policy areas (Rosamond 2000: 110-111).

In this research the focus will be on the ‘middle range’ theory of multi-level governance (MLG), in order to analyse the level of integration among member states regarding energy policy and the role of the non-state actors in the policy-making processes. Eising (2004), who conducted research about business interests in the EU, states that the multi-level governance approach to European integration captures the realities of EU interest intermediation better than neo-functionalism and intergovernmentalism. His quantitative analysis shows that the multi-level governance approach can incorporate other integration theories, as he identifies several types of interest groups; niche organisations, occasional players, traditionalists (intergovernmentalist assumption), EU players (neo-functionalist assumption) and multi-level players (multi-level governance).

1.2.3 Critical geo-politics

In this thesis energy issues will be the main sector of analysis, and it is this sector that creates geo-political concerns, especially in the case of large energy demand countries and regions (EU). Critical politics can fulfil a complementary role by filling the gaps within IR theory regarding geo-politics. Yet, the definition of critical geo-politics varies widely, therefore in this research the concept as explained by M.P. Amineh and H. Houweling (2005) will be used. Critical geo-politics, according to Amineh and Houweling, merges elements borrowed from political realism, from two domestic-society schools and from constructivism (2005, p. 1). The two domestic-domestic-society schools mentioned are liberal and Marxist IR theories, studies that both acknowledge the role of non-state actors in shaping the behaviour of state actors. Liberalist and Marxist differ when it comes to the unfolding of development, as liberalist scholars have the ambition to spread development outwards is progress, while Marxists see this as compulsive and destructive (Amineh and Houweling, 2005, p. 7).

Critical geo-politics thus acknowledge as well the notion of domestic social forces and private interests being brought into the domain of IR by the foreign policy, diplomacy, or domestic policies by governments. The forces (MNC’s) in this research are perceived as elements of society with the ability to cause change, culturally, ideologically as well as politically. However, critical geo-politics it rejects the secondary role of the state in international politics (Amineh and Houweling, 2005, p. 8). Critical geo-politics focuses not merely on states, but on state-society complexes. According to Amineh & Houweling (2005), critical geo-politics as an approach to the study of IR considers the missing variable of identity to be the fatal weakness of both ‘universal’ domestic society schools.

Identity is a typical concept of constructivism, which shows geo-politics also takes elements of constructivism. Constructivism helps to overcome the problem of a missing dimension of identity in rationalist theories, such as liberalism. Constructivism rejects the assumption of the existence of an inherent process of development, it rejects the idea that truth and reality exist outside the minds and will of agents (Amineh and Houweling, pp. 1-2). Constructivist are therefore able to incorporate into their theory the fact that human groups which interact over long periods of time at the group level set

themselves apart from each other by creating different identities. Although the focus in this thesis will be on state-business relations in the energy sector, and specifically the gas sector, identity can play a role in the social networks of the corporations.

1.2.4 Energy security studies

The main concern regarding energy issues is the security of this energy, both in terms of demand and supply. In this study the energy security issues of the EU and its member states concerning natural gas and LNG will be analysed. It is therefore crucial to give insight in what constitutes energy security by emphasizing on energy security theories.

A significant amount of studies focusses on the concept of energy security. And although a substantiated theoretical framework of energy security is missing within the academic field of IR, the concept is related to many sub-concepts and indicators who can give great insights in energy security issues. In the literature review the defining and conceptualisation of the concept Energy Security by other scholars was already highlighted. Kruyt et al. (2009) uses four dimensions that relate to availability, accessibility, affordability, and acceptability. While others use five dimensions related to availability, affordability, technology development, sustainability, and regulation (Sovacool & Mukherjee, 2011). Furthermore, the concepts described by Sovacool and Mukherjee (2011), ‘security of supply and production’, ‘dependency’, and ‘diversification’ are highly relevant to analyse energy security. They distinguish between simple and complex indicators and metrics to measure these concepts. For instance; natural gas supply per capita, dependency ratio, diversification in total supply, supply/demand ratio, stability of exporting countries, and the HHI index. These concepts and indicators will be incorporated in this study as well.

Amineh & Houweling (2007) use a model of demand, supply, and structural scarcity to assess the concept of energy security. The model is very useful to analyse the overall energy security issues and related policies. In this research the so called scarcity model will be used to analyse the EU energy security problem. The vulnerability of EU energy security is a product of the scarcity equation, which consists of three factors: demand- induced, supply-induced and structural scarcity (Amineh & Guang, 2014: 507). The scarcity factors will be further outlined in chapter 2.

1.2.4 Conclusion and integration of the theories

As is outlined above, more than one theory will be used in this study, which also means that several concepts from different theories are relevant in this study. Liberalism as a grand theory is the basis structure giving insights in the interdependency of actors in a globalizing world, together with a growing influential role for non-state actors. In addition, political economy scholars within liberalism highlight the decreasing influential role of states as a result of MNC’s strategies and influence. Literature on energy security will contribute in analysing the energy security of states, by emphasizing