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EU seeks new supply routes in wake of Russia-Ukraine gas row

The Kremlin (left) and Saint Basil's Cathedral (right), Moscow.

 
Background:

The Russia-Ukraine gas dispute highlighted the EU's dependency on Russian gas imports with some European countries suffering up to 50% gas delivery failure on January 1 and 2. Austria was among the hardest hit. 

In 2001, the EU-15 imported 40% of its gas from Russia with figures expected to rise above 60% by 2030 (Commission Green Paper on the security of energy supply, 2001). The EU-25 is dependent on Russia for over 25% of its gas needs with 80% of it is transited through Ukraine.

Issues:

The EU should seek to diversify its gas supplies away from Russia and look for new transport routes in the wake of the Russia-Ukraine row, Austria's Economic Minister, Martin Bartenstein, said at a debate in Parliament on 17 January. Austria, which is currently holding the rotating EU Presidency, has put energy supply issues high on the agenda of a summit of EU leaders on 23 March.

Bartenstein said three sets of measures could be expedited to diversify supplies in the long run:

  • a quick start to the Nabucco pipeline which will give Europe access to the large gas fields in the Caspian region and the Middle East. "These projects should be introduced quickly," he told MEPs. The pipeline is due for completion in 2020 and will go from Iran to Austria via Turkey, Bulgaria, Romania and Hungary.
  • a fivefold increase in the use of Liquified Natural Gas (LNG) that can be transported by ship to regions where a pipeline connection is not feasible. "There are projects to establish new terminals or expand the existing ones in some countries," Bartenstein said. He indicated that these were expected to increase the EU's capacity up to 160bn m3 per year by 2010, up from 60bn m3 at the current capacity.
  • increased transparency of hydrocarbon markets to reduce the high volatility of prices

In the short run, Bartenstein said the EU should consider building up enough gas stocks to make up for two months worth of possible shortages.

In addition, Mr Bartenstein said Austria would seek to "strengthen the diversification of the [EU's] energy provision through an increasing use or renewables". He said Austria would aim to "triple the use of biomass by 2010" as an alternative source of energy. However, he indicated that the use of nuclear energy is "not an option" and is "definitely excluded in Austria".

Positions:

Speaking before MEPs in plenary, Energy Commissioner Andris Piebalgs said a number of EU instruments are already available to diversify energy supplies. "On energy efficiency, we have a building directive entering into force which should be applied vigorously. The same applies to combined heat and power, and renewable energies: we have legal instruments and we should apply them," he said.  

During the debate in Parliament, EP vice-president and MEP Jacek Saryusz-Wolski (EPP-ED, Poland) said the security of the European energy supply was "an issue of a political nature" that "should be discussed in the context of foreign and security policy". "It is therefore absolutely essential that the EU extends joint action to the energy field and takes steps aimed at creating a proactive energy policy". "All the possible avenues aimed at enhancing the European Union's self-sufficiency in energy terms should be explored," he went on.

Some energy experts point out that an increase in the use of LNG will raise security issues due to the high flammability of liquid gas. They argue that the large ships and the special LNG terminals in ports could become prime targets for terrorists.

In an opinion to Le Figaro newspaper on 17 January, French Europe minister Catherine Colonna announced that France will table "in the coming days" a memorandum on EU energy policy. According to Colonna, a European energy policy is "all the more important when resources in fossil fuels are rarefying" and in the light of Europe's growing dependency on external supplies as highlighted by the recent Russia-Ukraine gas dispute. "Let us do for energy what we once did for coal and steel," wrote Colonna. The memorandum will be fed into an EU energy debate scheduled for the European summit in March. 

Source: EurActiv, 18 January 2006