The EU’s Energy Security Made Urgent by the Crimean Crisis

10-04-2014

The crisis in Crimea has led to a first round of sanctions between Russia and the EU – and may well lead to more. For both the EU and Russia, energy constitutes the main risk in this clash, as the two actors are largely interdependent: Russia exports 65 % of its gas to Europe, while the EU imports roughly one third of its natural gas from Russia. Among EU Member States, the level of dependency varies greatly, as does their ability to respond to Russian threats. Military and political tensions are obliging the EU to boost its energy security mechanisms and to seek out short- and long-term alternatives to Russian gas. The Union’s reserves are at present half-full, thanks to a mild winter, although no-one knows what the next winter will bring. Several studies have suggested that in the short term the EU could substitute Algerian, Iranian, Norwegian and Qatari gas for Russian gas, although the price would naturally be higher. Yet the risk of recession is estimated to be lower than was the case in the 1970 oil crisis. Most of the new supply would come via cargo ships, bypassing traditional pipelines, although this will require the rapid creation of new gas terminals. In the longer term, Azeri, US and Turkmenistan gas supplies may also quench the thirsty European market, depending on commercial and technical conditions. Other energy policies (focusing on renewable sources, greater efficiency, nuclear power, shale gas and the interconnection of the energy grids) can also play a role in reducing – if not completely eliminating – Europe’s dependence on Russian gas.

The crisis in Crimea has led to a first round of sanctions between Russia and the EU – and may well lead to more. For both the EU and Russia, energy constitutes the main risk in this clash, as the two actors are largely interdependent: Russia exports 65 % of its gas to Europe, while the EU imports roughly one third of its natural gas from Russia. Among EU Member States, the level of dependency varies greatly, as does their ability to respond to Russian threats. Military and political tensions are obliging the EU to boost its energy security mechanisms and to seek out short- and long-term alternatives to Russian gas. The Union’s reserves are at present half-full, thanks to a mild winter, although no-one knows what the next winter will bring. Several studies have suggested that in the short term the EU could substitute Algerian, Iranian, Norwegian and Qatari gas for Russian gas, although the price would naturally be higher. Yet the risk of recession is estimated to be lower than was the case in the 1970 oil crisis. Most of the new supply would come via cargo ships, bypassing traditional pipelines, although this will require the rapid creation of new gas terminals. In the longer term, Azeri, US and Turkmenistan gas supplies may also quench the thirsty European market, depending on commercial and technical conditions. Other energy policies (focusing on renewable sources, greater efficiency, nuclear power, shale gas and the interconnection of the energy grids) can also play a role in reducing – if not completely eliminating – Europe’s dependence on Russian gas.