Talks on with US to up gas imports, cut dependence on Russia

As the crisis in Ukraine shows little sign of letting up, one of the long-term consequences could be the rejigging of Europe’s energy policies, European leaders have been warning.

Talks had already begun to take place between European politicians and the US over the potential of increasing US natural gas imports, Britain’s foreign secretary William Hague said at the weekend. “I believe that there will be a recasting of the European approach,” Hague told the BBC, warning of the “inadvertent” and “unintended” consequences of the tensions between the West and Russia.

US ambassadors to the Visegrad 4, a group made up of Poland, the Czech Republic, Hungary and Slovakia, have called on US Congress to ease the regulations for shipping US natural gas in a bid to reduce dependence, reported website EurActive on Monday.

Meanwhile Europe’s Energy Commissioner Gunther Oettinger told Germany’s Die Bilt newspaper that negotiations over the South Stream pipeline -- one of several efforts to increase the number of transit routes for Russian gas to Europe – would be delayed.

Russia currently accounts for around a third of Europe’s natural gas imports. Past disputes between Ukraine and Russia – including in 2006 and 2009 when Russia temporarily cut supplies through Ukraine during the crucial winter months impacting European supplies – have brought this dependence into the spotlight.

There have been a number of initiatives to cut dependence on Russian gas: for example, BP is involved in a project in Azerbaijan that will bring Caspian Sea gas reserves directly to Europe, bypassing Russia. However to date little has been done to change the overall balance, with policy varying from one country to the next.

“I would say there has been diversification from Russia but it’s a slow process, and the determination of some countries to do so is somewhat stronger than others,” says Andrew Neff of IHS Global Insight. He points to the fact that there has been a resurgence in demand for Russian gas, over North African (Libyan) and Norwegian sources. “Russia has been seen as more reliable.”

Initiatives such as the Nord Stream Baltic pipeline running to northern Germany, has meant that last year “we saw more Russian gas to Europe last year, and less through Ukraine,” he adds.

Moving away from Russian gas presents a number of problems for Europe, and particularly for landlocked countries, which are dependent on the policies of neighbouring states. Alternatives such as shale gas are also limited given the reluctance of many European governments to get involved.

The current tensions over Crimea have the potential to instigate a change in energy policy towards shale gas in Europe, in much the same way that the Fukushima disaster in Japan led Germany to move completely away from nuclear power but only if they lead to a major supply disruption to Europe, argues Neff.

(This article was published on March 10, 2014)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.