23 November 2012, 00:41

EU-Russia gas supply partnership

EU-Russia gas supply partnership

Partnership, Europe's dependence, or interdependence between Russia and the European Union, there are many ways people use to define the EU-Russia relationship around natural gas. Even if Europe does try to diversify its energy suppliers and partners, or even redefine the rules of the game, gas could still remain the continent's key energy resource for the next century and Russia, its main supplier.

More than half of the European Union's (EU) energy including solid fuel, crude oil and natural gas, is imported from non-member countries. This proportion has gradually been rising over the past ten years, from 47.8% in 2000 to 54.1% in 2010.

The EU's dependency on imports of natural gas reached 62.4% in 2010, compared to just 48.9% in 2000. Where Europe imports its energy from has also evolved; in 2010, more than 70% of imported natural gas came from Russia, Norway and Algeria. Russia remains the main gas supplier, even though its share of the European market has dropped from 45.1% in 2003 to 31.8% in 2010.

Russia is the world’s second-largest producer of natural gas after the United States and for the European Union, Russia is a “key partner” according to Jerome Ferrier, President of the International Gas Union, speaking at the Russia Gas 2012 forum. Despite a current "antitrust" investigation, into Gazprom’s activities in Central and Eastern Europe, being carried out by the European Commission, Russia (and Gazprom) should continue to be crucial players in the European gas market. According to the Russian Gas Society President, Valery Yazev, there is no doubt, even if the use of renewable energy is rising, Europe will still need Russian gas.

The European Union's energy policy is based on three pillars, in the opinion of Beate Raabe, Secretary-General of the non-profit organisation, Eurogas. The main point is security of supply. “People can always count on energy being there” Ms Raabe told the Russia Gas 2012 forum. But there are two additional issues: the competitiveness and sustainability of energy. That is to say, gas should be as cheap as possible and be environmentally friendly. These three elements constitute the backbone of a new initiative adopted by the European Commission in November 2010 and titled ‘Energy 2020 a strategy for competitive, sustainable and secure energy’. This defined the European Union's energy priorities for the next ten years.

Nevertheless in Raabe’s opinion, nowadays a stronger focus is put on security. “Gas demand needs to be secured.” That is why, for example, a project such as the Nabucco pipeline, connecting the Caspian region to the EU, has been developed. Ms Raabe continues: “Europe is feeling uncomfortable about importing its energy, so the dynamic will be a reduction of oil and gas imports. It is not directed at Russia, it is directed at imports as a whole.” The intention is to diversify the sources of energy; this explains the growing attention being paid to shale and liquefied gas. Beyond ecological concerns, this also explains why European countries are interested in the development of renewable energy sources that can be produced in Europe.

Yazev however believes that these alternative energy sources are insufficient and unable to compete with gas because of their high costs. “When we have to talk about money, and now with the crisis, there is not a lot of cash, we have to be more realistic. Even if it is shameful, if it is in their interest, Europe will go back to using coal. It is not ecologically friendly but it is cheap.” The price of energy remains the most crucial consideration. Gas is both affordable and accessible and so the 21st century seems set to be a Golden Age for natural gas.

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