A Cold Winter to Come? The EU Seeks Alternatives to Russian Gas

24-10-2014

The crisis in Ukraine has led to seven rounds of sanctions between Russia and the EU – and may well lead to more. Energy is the most alarming casualty in this clash, with the EU and Russia largely interdependent in the domain. The level of dependency among EU Member States varies greatly, as does their ability to respond to Russian warnings and actions. Ukraine's gas situation is also at stake. The Russian gas exporter Gazprom ceased exporting to Ukraine in June. In late September, gas cuts were registered in Slovakia, Austria, Poland and Romania – in some cases to prevent Russian gas from being diverted to Ukraine. A provisional solution for Ukraine's winter supplies was reached in Berlin on 26 September, but has yet to be completely endorsed by Moscow and Kiev. However, the risk of gas shortages for the rest of Europe has not been averted. Military and political tensions have obliged the EU to boost its energy security mechanisms and seek alternatives to Russian gas. The European Commission has just concluded a stress test on the EU gas system to assess the impact of a potential gas crisis. Several studies have suggested that, in the short term, the EU could substitute Algerian, Norwegian and Qatari supplies for Russian gas, although this would cost more and require new gas terminals. The Union’s reserves – at present 90 % full – will also help, but for how long depends on the coming winter. In the longer term, gas supplies from Azerbaijan, the United States, Iran, Mozambique, Australia, Israel and Turkmenistan could also supply the thirsty European market. EU energy policies (on renewable sources, greater efficiency, shale gas and interconnection of energy grids) could also play a role in reducing – if not completely eliminating – Europe’s dependence on Russian gas.

The crisis in Ukraine has led to seven rounds of sanctions between Russia and the EU – and may well lead to more. Energy is the most alarming casualty in this clash, with the EU and Russia largely interdependent in the domain. The level of dependency among EU Member States varies greatly, as does their ability to respond to Russian warnings and actions. Ukraine's gas situation is also at stake. The Russian gas exporter Gazprom ceased exporting to Ukraine in June. In late September, gas cuts were registered in Slovakia, Austria, Poland and Romania – in some cases to prevent Russian gas from being diverted to Ukraine. A provisional solution for Ukraine's winter supplies was reached in Berlin on 26 September, but has yet to be completely endorsed by Moscow and Kiev. However, the risk of gas shortages for the rest of Europe has not been averted. Military and political tensions have obliged the EU to boost its energy security mechanisms and seek alternatives to Russian gas. The European Commission has just concluded a stress test on the EU gas system to assess the impact of a potential gas crisis. Several studies have suggested that, in the short term, the EU could substitute Algerian, Norwegian and Qatari supplies for Russian gas, although this would cost more and require new gas terminals. The Union’s reserves – at present 90 % full – will also help, but for how long depends on the coming winter. In the longer term, gas supplies from Azerbaijan, the United States, Iran, Mozambique, Australia, Israel and Turkmenistan could also supply the thirsty European market. EU energy policies (on renewable sources, greater efficiency, shale gas and interconnection of energy grids) could also play a role in reducing – if not completely eliminating – Europe’s dependence on Russian gas.