The gas dispute between Russia and Ukraine brings energy security and Central Asian geopolitics to the top of the 2009 agenda.
 | Trusted Partners?Russia's Prime Minister Vladimir Putin follows Ukraine's Prime Minister Yulia Tymoshenko to the signing ceremony for a 10-year gas supply deal that ended the January 2009 gas dispute between the two countries (Photo: Reuters) |
It was a severe case of dêja vu. “This cannot become an annual event,” fumed the European Commission President Jose Barroso when Russian gas deliveries to Europe stalled in January 2009. “We have to stop talking about energy security in Europe, and start doing something.”
Barroso was complaining about the gas price dispute between Russia and Ukraine that left millions of Europeans shivering through early January. Europe gets a quarter of its gas from Russia and 80 percent of that comes via Ukraine.
By 2030, predicts the International Energy Agency (IEA), Europe’s gas imports will have doubled, much of the extra from Russia. Yet “Russia has cut off its status as being a reliable energy supplier to Europe,” said Fatih Birol, the IEA’s chief economist.
But Europe has done little to reduce its reliance on Russia despite Moscow’s history of cutting off gas and oil supplies to Ukraine, Belarus, Lithuania, and Georgia. The Russia-Georgia war in 2008 also disrupted energy supplies through one of the only routes from Central Asia not controlled by Russia.
Russia has also unsettled gas consumer nations by trying to turn the Gas Exporting Countries Forum (GECF) into a formal organization that could one day manipulate world gas prices as a “gas OPEC”.
 | Pipe DreamsRussian oil and gas pipelines to Europe (Graphic: EIA) |
One option for Europe is to diversify into liquefied natural gas (LNG), transported by tanker from alternative markets like the Middle East. Greece used LNG to get through the January gas freeze and European countries like Italy, Britain, Belgium, Spain, and France have recently added LNG infrastructure to their energy grid.
There are alternatives to gas. Some European countries have built up wind power, France has its nuclear option, and several countries have leaned heavily on cheap coal. Coal bed methane (CBM)—natural gas extracted from coal deposits—is attracting interest in Britain, Poland, and Germany. But in the short-to medium-term, however, Europe still needs a reliable supply of gas.
Pipe dreams
One new supply route that should be ready in 2009 is the Medgaz pipeline linking Algeria's huge gas reserves to Spain. But that gas cannot get to the rest of Europe until France installs equipment to transport it from Spain. Faced with dependence on Russia, the lack of an integrated gas network has become Europe’s most pressing energy security issue.
Moscow’s solution to this problem is to build the proposed Nord Stream and South Stream pipelines that would bypass Ukraine and other former Soviet states via the Baltic Sea and the Black Sea.
However, Eastern and Central European countries do not want to be bypassed and oppose these pipelines, while Scandinavian countries are concerned about the likely environmental impact. The EU is now exploring another alternative—the Nabucco Project—that would bring about five percent of Europe’s gas needs from Central Asia, bypassing Russia.
This would make Central Asian producers like Kazakhstan and Turkmenistan even more important. China plans to get more of its gas from Central Asia. Russia already depends on cheap Central Asian gas to satisfy its internal demands and keep selling its own gas to Europe. And the United States wants to draw on Central Asian resources to guarantee secure energy supplies to world markets.
The great unknown is Iran, which is willing to export gas to Europe and could provide an alternative transit route for Central Asian energy. But Iran is a political pariah because of its nuclear program. Perhaps the most tantalizing prospect for energy politics in 2009 is a possible rapprochement between the US, Europe, and Iran. Hopes are high for U.S. President Barack Obama to end that deadlock and stop the succession of energy crises that frustrate Europeans every winter.
editor: James Tulloch
publishing date: February 6, 2009
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