Vail Daily column: Keys for reducing the dependency on Russian energy
May 11, 2014
The Ukrainian crisis is compelling many Europeans to re-evaluate their relationship with Russia over many issues. A key topic is Europe’s dependency on Russian natural gas. The matter resurfaced recently in light of recent events. What remains unknown is whether recent events will compel the European Union to address the matter — or if Brussels will remain reliant upon Moscow for its energy needs.
The European-Russian energy relationship is dominated by several issues:
• Russia provides a majority of Europe’s natural gas needs.
• The Kremlin is utilizing its energy clout as a foreign policy instrument.
Russia’s economy could experience a major financial setback if the EU finds another energy source.
• The EU can sever its reliance on Russian energy if it: One, relaxes its environmental regulations regarding energy exploration; two, overcomes obstacles toward accessing Central Asian and American natural gas supplies.
European reliance on Russia for its natural gas needs is problematic for several reasons.
Moscow is known for disrupting its energy supplies to its European customers periodically when it is involved in different disputes with its neighbors. Russia has cut off the Ukraine’s and Belarus’ energy supplies during different disputes it’s had with both nations. Russia’s action has resulted in a disruption to Russia’s other customers who rely on the pipelines transiting both countries. Moscow has morphed its natural gas advantage into a foreign policy “weapon.” An example occurred in 2008. Russia inexplicably reduced the Czech Republic’s natural gas supplies after Prague agreed to host various sites for a U.S. Anti-Missile Radar system — a system Russia opposes. The Kremlin arguably expressed its displeasure over the decision via reducing Prague’s natural gas supplies. What is unknown is how many other times has this similarly occurred. Seventeen European nations rely on Russia’s for their natural gas needs. Moscow’s reliability as an energy supplier is debatable.
The EU can overcome its natural gas dependency on Russia if Brussels relaxes its regulations toward energy exploration in environmentally sensitive areas, and/or locates non-Russian natural gas sources. The first option entails allowing different EU energy firms to explore the Arctic for potentially vast natural gas deposits, plus various parts of Europe for shale gas deposits — deposits that are convertible to natural gas. A second alternative is to finalize various pipeline arrangements with different Central Asian suppliers and distributors. A final possibility is using the U.S. as the EU’s primary natural gas source.
Brussels will probably finalize different pipeline deals with various Central Asian energy suppliers and distributors; it will also seek to augment access to American natural gas markets. Various EU members have been in negotiations with different Central Asian nations periodically with different results. A strong possibility is Moscow’s incursion into the Ukraine deliberately caused negotiations to collapse over two pipeline projects which would have carried natural gas into Southern Europe from Russia. The Ukrainian crisis likely solidified and expedited different European nations support of two pipelines that will start carrying natural gas from Azerbaijan to Europe by 2018 — pipelines devoid of Russian suppliers or distributors.
Brussels will likely seek to augment its U.S. natural gas imports. Achieving this objective will entail placating American policymakers concerns about increasing natural gas prices for U.S. consumers, which could cost votes during election. The EU will probably make concessions addressing both concerns. Brussels is less likely to augment its natural gas exploration activities in the Arctic or in shale gas formations. The EU will probably not deviate from its strict environmental regulations to sever its Russian energy links.
Russia’s economy has the most to gain or lose depending on the EU’s energy direction.
Energy is Moscow’s principle economic revenue source. Russia’s economy could experience a major financial setback, if the EU finds another energy source. Moscow may have problems locating other natural gas customers. It is known for untrustworthiness, unpredictability and unreliability. Many potential customers, notably China with its huge energy appetite, may be reluctant to pursue an energy relationship with the Kremlin consequently. Russia will attempt to mitigate the problem by dealing directly with the EU’s individual members over energy issues. What remains unknown is whether the Kremlin will succeed given its current conduct in Ukraine.
Russia’s intervention in the Ukraine was a wake up call for many Europeans. Many Europeans seemingly forgot Moscow’s historical interest in and desire for strategic dominance, especially over the countries along its periphery. A key to reducing the Russian’s clout is to reduce Europe’s reliance on the Kremlin for their natural gas needs. What remains unknown is whether Brussels has the political will for it. A strong possibility is the EU may swallow hard and start taking risks they probably wouldn’t unless, one, they want to remain at the Kremlin’s mercy, or, two, many EU parliamentarians want to keep their jobs once their seats are up for election.
Matthew Kennedy has a master’s degree in diplomatic studies from the University of Westminster in London. He’s lived in Europe, Asia and Russia. Comments or questions can be directed to firstname.lastname@example.org.
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