Despite EU efforts, natural gas remains Russia’s trump card

In spite of a strategy of storage and diversification, the European Union remains heavily dependent on Russian gas imports, EURACTIV France reports.

As European leaders gather in Brussels on Thursday (6 March) for an extraordinary summit on Ukraine, they are well aware that it is not only democracy in this former Soviet republic which is at stake.

Ukraine is the gateway to 80% of the Russian gas in Europe. The country currently provides nearly a quarter of the gas consumed in the EU and any threat of economic sanctions towards Russia could lead to retaliation over gas supplies.

In 2008-2009 during the last major gas crisis, some Central Europeans were left in the cold during the winter when Russia decided to turn off the tap.

The issue is now back on the table and remains a trump card in the hands of Russia despite the EU's efforts to mandate European countries to build up sufficient gas reserves.

'Reverse flow' and gas storage

One of Europe’s strategies in case Russia cuts of supplies is to reverse gas flows, which arrive mainly from East to West but can also transit in the opposite direction.

“Technically it is possible but in very small quantities," says Simon Issard, an expert in gas infrastructure at Columbus Consulting. "We must not forget that gas is based on flow logic. In theory it can be bought anywhere else, notable as liquefied natural gas, compress it and be sent anywhere. But in practice, it takes time to transport boats and storage infrastructures. That is the problem,” he said.

The European Commission also urged its 28 member states to increase their storage capacity of natural gas. Unlike oil, for which the International Energy Agency requests its members to have 90 days of consumption, no overarching strategic reserve is organised for gas.

“For gas, this question arose in 2009 but was unsuccessful because all countries do not have the capacity for natural reserves,” said Sylvie Cornot-Gandolphe, an economist at Cedigaz.

The storage of natural gas is mainly done in empty fields, saline or aquifer cavities but the geological conditions are not always met. In this case, creating storage capacity can be very expensive. In Spain the Castor storage project represents a €1.4 billion investment, but it has been delayed due to suspicious seismic activity recorded in its vicinity.

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“The building of storage capacity was initially developed to limit investment in the network infrastructure, which suddenly has to carry much more capacity in the winter. The implementation of strategic storage meets a different logic,” Cornot-Gandolphe says.

Several guidelines encourage countries to have a minimum storage rate but they are not binding, and the cost of the operation is a deterrent. Given the downward trend in the price of natural gas in Europe, under competition from coal, gas producers have no interest in buying in advance. Reserves were small at the beginning of the winter with an average of 40% in Europe in November 2013.

Hungary, Bulgaria and Romania exposed

After one of the three warmest winters in 30 years, the situation remains under control. In France GDF-Suez is still the main natural gas actor and depends on 17% of Russian gas, but has large storage capacities.

“So far we have not noted any supply problem coming from Russia,” a spokesman for GDF-Suez said.

The 10 billion cubic metre capacity of Storengy, a GDF subsidiary, are filled to 36% right now against 70% last October. In Germany stocks are higher, with 60% available reserves. However, some countries are potentially exposed to a supply disruption, such as Hungary where stocks are filled to 20% only.

“Hungary, Romania, Bulgaria and to a lesser extent Greece and the Balkans are more vulnerable in the case of a crisis,” Simon Issard notes.

Despite the development of renewable energies and to a lesser extent infrastructures, Europe keeps some dependence towards Russia, which will have to be taken into account when considering possible sanctions.

The situation was denounced by the EU Climate commissioner, Connie Hedegaard, who said on 3 March that Europe imports each year €400 billion of fossil fuels.

“Ukraine is showing that there is a real political impact from being dependent on imported energy. I hope that this issue will be debated at the European Council on climate,” the commissioner added. The council is set to take place on 20 and 21 March.