Europe energy: Russian addiction, American seduction

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Europe energy: Russian addiction, American seduction

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US President Barack Obama on his recent European trip came offering solutions for the trouble Europe is in with Russia over Ukraine’s Crimea region: he promoted American energy exports. At the same time he highlighted the European Union’s interest in diversifying its sources. Russia is such a big supplier that this gives it more political leverage than the transatlantic allies like.

Obama said: “I think that Europe, collectively, is going to need to examine in the light of what’s happened, their energy policies to find other additional ways that they can diversify and accelerate energy independence. The United States as a source of energy is one possibility.”

It has been on the EU’s to-do list for several years: reduce its energy dependence on its resource-rich neighbour.

Europe currently buys more energy from Russia than from any other country. Its other main suppliers are Norway, Algeria and Qatar.

As a whole, 40 percent of its gas and 20 percent of its oil is Russian. The proportion varies according to country, of course.

For instance: Finland, Bulgaria and Slovakia get all of theirs from Russia. It’s 60-80 percent for Poland, the Czech Republic, Hungary, Greece and Austria’s; 20-40 percent for France, Italy and Germany.

In 2009, Russia hit Europe where it hurt when it cut the supply flow through Ukraine in a price dispute with Kyiv. European industry and households ran short, and the winter was colder than usual.

Both the EU and Russia are dependent on fixed pipelines for the transit of gas. But now shale gas extraction in the US makes it a potential exporter in liquefied form (known as LNG).

Rather than reduce dependence on Russia, Europe developed new plans to go around Ukraine as a transit country.

Russia’s Gazprom is the majority shareholder of Nord Stream, a pipeline through the Baltic Sea; German companies own the next-largest share, then the Dutch and French.

The South Stream system to pipe Russian gas westward through the Black Sea is a Russian, Italian, French and German project (under construction). So is Nabucco, a joint venture by Turkey, Romania, Bulgaria, Hungary and Austria to pipe Central Asian gas.

The Americans are keen to start shipping their liquid gas. Europe is only using about 20 percent of its LNG import terminal capacity. That’s because till now, it’s been happy buying cheap Russian gas.

Meanwhile, however, the 28 EU members still have a lot of work to do to make their cross-border pipelines compatible, so that one member can help another in case they need to.