Europe still hooked on Russian gas supplies


Jul 18, 2018-

The EU hosts on Tuesday talks between Moscow and Kiev on Ukraine’s gas transit role, as Europe imports ever more Russian gas despite a desire to reduce its dependence on Moscow.

European demand for Russian gas declined between 2010 and 2014—when a popular uprising in Kiev ousted a Moscow-backed regime and Russia annexed Crimea and moved to support an insurgency in the ex-Soviet country’s east.

Since then it has grown on the back of a drop in European production—notably in the Netherlands.

The continent’s reliance on imported gas has particularly benefited the Russian gas giant Gazprom, which sits on 17 percent of the world’s gas reserves. Gazprom is more than 50 percent controlled by the Russian state and is often seen as a powerful geopolitical weapon at the Kremlin’s disposal.

The company currently accounts for more than a third of European gas consumption.

Exports to Europe lept in 2016 and 2017, thanks largely to a cold winter. Earlier this year Gazprom announced a new record export volume.

Russian gas currently reaches Europe through several pipelines—Nord Stream 1 brings gas to Germany, while two pipelines arrive in Poland through Belarus.

Four others go through Ukraine, as well as a separate pipeline to Turkey and direct deliveries to Finland and the Baltic states.

But Gazprom is seeking to develop new pipelines, with the financial support of major European groups, to maintain its market share and minimise transit through Ukraine.

The company hopes to put into operation two new gas pipelines that will bypass Ukraine by the end of 2019: TurkStream, via Turkey, and Nord Stream 2, via the Baltic Sea.

The European Commission has reservations about the projects.

Without being able to oppose them, it wants to make sure the new pipelines conform to the rules of the European energy market—particularly in terms of competition.

Poland and eastern European countries are most opposed to their former Soviet master’s new ventures.

Despite Europe’s desire to diversify its suppliers, alternative sources are struggling to gain ground.

The United States, a major producer of natural gas, has recently embarked on a commercial offensive in search of new markets, supported by President Donald Trump.

But shipping liquified natural gas is still considerably more expensive that transporting Russian gas via pipelines.

British oil major BP in July began exploiting a giant gas field in Azerbaijan, which is to be the first link in the “Southern Gas Corridor” that will bring supplies to Europe via Turkey, Greece, Albania and the Adriatic Sea.

It is set to be completed in 2020.

Published: 18-07-2018 08:12

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