1 Edward Hunter Christie 1 SECURITY OF SUPPLY: SOME THEORETICAL BUILDING BLOCKS 11 th European Conference of the International Association for Energy Economics (IAEE), Vilnius, August 2010 1 Research Partner, Pan –European Institute (PEI), Finland, Edward.Hunter.Christie@gmail.com Overview Theoretical building blocks with economic and risk analysis foundations are developed in order to generate a policy-oriented assessment framework for net importers of crude oil or natural gas. The framework is briefly illustrated for the countries of Central and Eastern Europe. Definitions of energy security are re-visited, differentiating between the short-term and the long- term and between risks as opposed to threats. Selected recent contributions from the energy security literature are then reviewed with a particular focus on its theoretical underpinnings. In a second step an overview of stylised facts concerning energy relations between European states and the Russian Federation is provided with particular attention given to Central and Eastern European states and to the recent pattern of abrupt price changes and supply disruptions. The analysis then explores the issue of target functions within a primarily state-centred framework. A plausible target function for the Russian Federation is one that depends positively on both the profits of state-run corporations and the extent of political leverage that is attained over foreign countries. A plausible target function for an import-dependent Central or Eastern European state may be derived from a loss-minimising trade-off between cheaper imports of foreign energy products and political autonomy and security. In a final section the potential contribution of forthcoming EU legislation on security of gas supply is briefly discussed. Policy recommendations are then offered.