The EU and natural gas: The new security agenda

  
Disclaimer: all opinions in this column reflect the views of the author(s), not of EurActiv.com PLC.

"Energy supply [...] should dominate the EU's overall security objectives for the immediate future, given its dependence on Russia," writes George Joffe, reserarch fellow at the Centre for International Studies at the University of Cambridge in an April paper.


The following commentary was produced by George Joffe.

"As the European winter draws to a close, there is a metaphorical sigh of relief in Brussels that the events of 2006 and 2009 have not been repeated. In January 2006, a gas dispute between Russia and Ukraine alerted European leaders to concerns that gas supplies to Europe itself might also be affected.

Three years later, those fears were confirmed, and for three weeks, the eastern member states of the European Union shivered until Russia and Ukraine reconciled. Both events highlighted Europe's dependence on Russian oil and gas, which has grown since the first pipelines were constructed in 1982 despite American objections that Russia could, if it wished, use this as political leverage.

In 2006, for example, Russia supplied 43.9% of Europe's pipeline gas, with Norway providing 24.3% and North Africa an additional 12.8%. Natural gas provided almost a quarter (24.6%) of Europe's energy supply in 2006 and since then its importance has grown.

It is hardly surprising, therefore, that the EU continues to be acutely concerned over energy security. There are three paths to energy security: through supplier-consumer contract, through strategic reserves and by diversity of supply. The EU has tried the first two options; now it is turning to the third as well.

The EU's primary weapon has been contractual guarantees with major suppliers through the 1991 European Energy Charter. This sought regulations for trade, transit and investment, bringing the Union together with the old Socialist Bloc in Eastern Europe and the former Soviet Union. The treaty was signed by forty-one states in The Hague in 1994 and entered into force in 1998. However, Russia - the real target of the treaty - has refused to sign it because of its sovereign control over pipelines.

Alternatively and where possible, EU member states should create adequate strategic reserves to guard against supply disruptions. As far as oil is concerned, member states have to maintain reserves of up to ninety days-worth of oil supplies; gas, however, is far more difficult to store and there is no generalised strategic reserve requirement.

Italy does have a significant reserve as a result of supplies from Algeria and other states have made similar arrangements but most depend on constant supply agreements. The implications of interruptions to supply became abundantly clear in January 2009.

In addition, a recent study of the possible consequences for the United Kingdom concluded that an unexpected single day interruption would halt most industrial plants, and back-up fuel supplies would only compensate for 10 to 15% of demand. Over six weeks, economic losses would equal up to 0.81% of GDP.

Some industries would suffer long-term damage and up to 1.4 million people would possibly face unemployment.

These considerations highlight the need for Europe to diversify its energy sources, an issue that both the EU and Russia have been exploring in recent years. Russia has also been anxious to separate its disputes with neighbours such as Ukraine and Eastern Europe from the issue of its ongoing gas supply to Europe.

Some industries would suffer long-term damage and up to 1.4 million people would possibly face unemployment.

These considerations highlight the need for Europe to diversify its energy sources, an issue that both the EU and Russia have been exploring in recent years. Russia has also been anxious to separate its disputes with neighbours such as Ukraine and Eastern Europe from the issue of its ongoing gas supply to Europe.

Two proposals have been made. The first, made in 2007, provides a new pipeline – known as Nord Stream – from Russia to Germany involving Gazprom, Eon and BASF, that would carry up to 55 billion cubic metres a year.

The South Stream pipeline, proposed in 2008 by Gazprom and ENI, would run from Southern Russia via the Black Sea, Bulgaria, Greece, Serbia and Croatia to Italy and Austria. This would carry between 30 and 63 billion cubic metres of gas a year.

Both pipeline projects - one of which (Nord Stream) is now being constructed whilst the other has been agreed - still depend on Russian goodwill although they do avoid the problems of Russia's 'near abroad'.

The EU, therefore, has espoused an alternative: the Nabucco pipeline from the Caspian Sea to Bulgaria, Romania and Hungary via Turkey. This, a 30 billion-cubic-metre-a-year privately financed project, would avoid direct dependence on Russia, provided that it does not pressure its southern neighbours.

Thus, not even the €7.9 billion Nabucco pipeline – or the subsidiary pipelines proposed from and through Turkey – mean that Europe can avoid the Russian embrace. This has some very significant security implications for Europe and NATO in light of Georgia's experiences in 2008. Energy supply, in short, should dominate the EU's overall security objectives for the immediate future, given its dependence on Russia."

Advertising