russian-oil

It’s now been more than two years since the Russian annexation of Crimea. Relations between the Kremlin and most European capitals are still strained, and EU sanctions are likely to be extended next week (21-24 June 2016). Nevertheless, Russia is one of the EU’s largest energy suppliers and, in 2013, accounted for almost 40% of EU natural gas imports.

Given the current frosty nature of EU-Russia relations, our commenter Rafael, pointed out that both parties should work to diversify their energy links. Rafael argues that the EU is already making progress diversifying its energy supplies via, for example, the Trans Adriatic Pipeline, while Russia itself has begun looking for new clients, most notably China.

Will these efforts ultimately be successful, or is geographic proximity more important? Is Rafael right to be so confident? To get a reaction, we spoke to Dr. James Henderson, Senior Research Fellow at the Oxford Institute for Energy Studies. How would he respond?

hendersonAs a consumer, you would always want to have the largest variety of import options available, both to increase your security of supply and to increase your bargaining strength in any price negotiations. Similarly, as a supplier, you would never want to be reliant on sales to one region or country…

Having said that, there are clear limitations to those strategies having full effect. Russia’s negotiations with China have been more difficult than Russia had hoped. The timescale for potential Russian gas exports to China is lengthy. The first pipeline is unlikely to be supplying gas before 2021, and even at that stage exports to China would be only a quarter of current exports to Europe…

Similarly, from a European perspective, the Trans Adriatic Pipeline pipelines will only be bringing 10 billion cubic metres (bcm) of Azeri gas to Europe, compared to 160 bcm imports of Russian gas in 2015. This does not mean that Europe’s attempts to diversify are wasted; clearly it is important to demonstrate to any major supplier that you have alternatives. But, in reality, Europe is going to remain reliant on Russian gas for the foreseeable future, not least because Europe’s indigenous supply is in decline, and therefore the need for imports will increase. And the largest potential source of imports with available production capacity is Russia…

Next up, we had a comment from Cristina, who was very critical of the EU’s energy strategy, arguing that it is unwieldy and unable to cope with a changing political and technological landscape. Is she correct? Are the EU’s energy strategy and investment plans flexible enough to take into account emerging trends?

To get a response, we spoke to Tatiana Romanova, an associate professor of European Studies at St. Petersburg State University, whose research focuses on EU-Russia energy relations. How would she rate the EU’s current energy strategy?

romanovaWell, I think the EU’s energy planning is flexible enough because, first of all, it is designed to match the EU’s priorities: construction of the internal market; security of supply; and environmental safety, protection, and climate change. So, it’s logical that the EU designs it energy and infrastructural policy to include all these priorities. And, on top of that, we also have to keep in mind that the EU just provides a framework, and in terms of infrastructure it’s up to private companies to finally implement that. And, of course, private companies do take into consideration all sorts of factors – including economic cycle, availability of finance, demand, supply, security, and that sort of thing –  when they make investment decisions. So, I do believe in the market and private companies, and although I think energy planning is good, it shouldn’t be too political…

Finally, we had a comment from Drew, who argues that energy prices are likely to stay low for the foreseeable future. If oil rises above $60 a barrel, for example, some analysts argue that US shale producers will start increasing production, dragging down prices again. Similarly, advances in Liquefied Natural Gas (LNG) mean that gas prices could remain low for some time.

If oil and gas are going to remain cheap and plentiful, does that reduce the incentive for Europe to diversify? We recently spoke to Fatih Birol, Executive Director of the International Energy Agency (IEA), and asked him if he agreed with Drew that cheap oil was here to stay:

birolYes, I think US shale oil production puts a ceiling on the increase of oil prices. So, unlike in the past, as long as we have US shale oil, prices cannot go to high levels for a long time. According to our analysis, if prices rise to $60 or so, we can see US shale coming back and putting a ceiling on oil prices, and as a result we may see oil at this price for some time to come.

Can Europe break its dependence on Russian energy? Or are Russia and the EU likely to remain bound together, despite attempts to diversify their energy connections? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: CC / Flickr – antjeverena


88 comments Post a commentcomment

What do YOU think?

  1. Sebastien Chopin

    lol you should ask the Brexiters… they have an answer to anything… even when they have no idea…. no sorry… especially when they have no idea

    • MarineLePen

      Go drown in your socialst mumbo jumbo, have your EU army and let your entire superstate be overrun by Merkel’s immigration policy. Remainers are the stupid ones who want to erase national identity and replace it with touchy feely policies.

  2. Joao

    How? It’s called renewable energies… Those found everywhere… you know?..

  3. Nando Aidos

    Simple. Stop asking inane questions and take action. Go renewables, like Germany and other countries are doing.

  4. nando

    Simple. Stop asking inane questions and take action. Go renewables, like Germany and other countries are doing.

  5. Karel Van Isacker

    Why on earth would Europe break its dependence on Russian energy? or do you prefer Middle east ISIS energy?

  6. Pablo Ribera Payá

    Yup. Renewables for almost all the mix, plus some sort of support source (coal / nuclear). In 10 or 15 years we can be free of russian gas and almost free of CO2 emmissions in that sense.

  7. Pablo Ribera Payá

    That, and electricity highways and a real European Energy Policy: the south should be covered in solar panels, for instance.

  8. Max de Marce

    Europe sometimes is over-critical of the things which actually help Europe to be strong and competitive. Natural gas consumption is growing in every region of the world (US, China, Middle East, India, Africa) – it is the level of our technological development. Natural gas helps humanity to build low-carbon sustainable economy. You can’t effectively integrate renewables without natural gas.
    So Europe is blessed to have neigbouring Russia with aboundant gas resorces. Russian gas strengthens EU economy. In return EU is exporting high-tech products and services. And benefits a lot.
    Imagine one day Russians are wise enough to use effectively all their resources at home and stop exporting commidities and raw materials. Will it help EU? So EU is the winning side in present day situation.

  9. Vinko Rajic

    Simple , cheap and clean but we are not working on it . EU and Russia can work together but EU should not depend on any other country not even on the US . EU can continue import from Russia but EU should invest in clean energy .
    100% solar, wind and hydro is very cheap and clean option for the EU. Price for solar panels is under 0,5 Euro/Watt . EU could simple order 2000 gigawatt solar panels for 1000 billion Euro . EU should give for free 10 to 50 kW of solar panels to all EU citizens ( 10 – 500 kW to farmers) willing to install it by themselves . They should pay off those panels with electricity they don’t use also with electricity they send back to the grid. To install it like this is simple and cheap , it is like IKEA furniture : https://www.youtube.com/watch?v=Dzar3xqCb6k

    • Tarquin Farquhar

      @Vinko Rajic
      Russia has been a wicked country for a century or more – rely not on its people or its resources.

  10. Παυλος Χαραλαμπους

    a new technological revolution maybe?? come-on let’s be realistic even if we managed to produce the amount of energy we need using solar panels wind generators even geothermal systems WE STILL NEED PETROL for the medicine ,food production, lndrustial prossesing and products, lubricants etc even the production of of things like solar panels or wind blades are need petrochemicals!!! even electric cars need engine oil!!!

  11. George Singleton

    They will do it by stealing the petroleum and the gas from Greece,Rumania,albania ,Cyprus after destroying their evonomies with a fake debt..Its all done..

    • Tarquin Farquhar

      @Miro Šarić
      Russia has been a wicked country for a century or more – rely not on its people or its resources.

    • Tarquin Farquhar

      @Fazil
      No offence old bean but Spain is not renowned for its political stability nor its low-levels of corruption.

      I for one would NOT want to rely on Spain on such a vital matter.

  12. fazil

    We just an article about about how just a small part of Spain can cover the full energy supply of Europe. We have to go leave fossil fuel anyway why not do it now. Pleas check our facebook or website fazil.es.

    • fazil.es

      *Meant to say we just wrote an article about that, apologies

  13. Wolfgang Spelten

    Why should we– i prefer to be delivered by Russia and not from Sharia ruled Countries. in 5 years we will be at a level of 40% renewable energy.. so the question will get less important with every year.

    • Gyorgy Gajdos

      Dangerous stuff. Better keep everything home in Europe.

  14. Miguel Quintas

    To decrease the dependency of Russian energy it is necessary to invest in the energy canals to move the energy from one country to another in EU.

    For example, Portugal produces more electric energy than it needs, however it is only possible to export to Spain because France don’t allow to create those canals from Spain to France to protect their market. It’s being said that has an agreement to do so, but the schedules never get done.

    These canals will allow to bring more energy (oil or gas) from our neighbors Morocco and USA that start doing big businesses with Portugal.

    So the EU is dependent to Russia because we are not united and only want what is best for each country and not for all countries.

    I wish to see the EU that founders wanted to be and not this EU. Solidarity was the main goal but all we see is lack of solidarity.

  15. Omid Danesh Khorak

    The Russian Crimean annexation took place after European (German Politicians) participations in Meydoon disorder and elevation of demonstration into arm conflict with official Government of Ukraine 8-) For sure intelligent European governement could use more Nuclear energie :D

  16. Zé Rodrigues

    Is that a question ? There seems to be a total ignorance not only of the Mediterranean and other sources

    • Gyorgy Gajdos

      Who ignores it? You Spanish, French and Italians should be manufacturing the sea-waves/tidal generators like maniacs. Why don’t you?

    • Tarquin Farquhar

      @Gyorgy Gajdos
      Agreed!

    • Miguel Quintas

      @Gyorgy Gajdos Actually Portugal produces more electric energy than it needs just don’t have canals to export it because France doesn’t want to protect their market.

    • Tarquin Farquhar

      @Josepha Guillaume
      What parallel universe are you venting your spleen from?

  17. Hans-Georg Braun

    There is no need for this. Russia never used the energy options for political pressure to Germany. Not in cold war times. They are not that stupid and aggressive as the American counterparts. .

  18. Gyorgy Gajdos

    Renewables. Wind, sea-waves and solar on large scale. It is twice beneficial: you create jobs for the manufacturing/install/maintenance of these systems and solve your energy problems too. Far better than money going out and ready made product coming in.

    • Tarquin Farquhar

      @Alain Guillaume
      Ahh, French the language that is is 4 times smaller than its superior English brother.

      Get with the program and up your game, English is the world language as French is lame!

      ;)

  19. Jörg Ibanez

    Why should we? It is a give and take just like everywhere in the world. That is called trade. And that is good to have much in common with our russian friends….

    • Tarquin Farquhar

      @Rene Rudolfo Bauer
      With ‘friends’ like Russia who needs enemies!

  20. BUBBLESdebates

    Why should we stay when the EU is just draining our money? We don’t need them! Also personally I don’t want to be in with a chance of changing the pound to euros.

  21. Jürgen Küppers

    No need to break our dependance to Russian energy justbecause Americans want so – in order to overtake themselves!

    • Tarquin Farquhar

      @Jürgen Küppers
      Said like a denizen of a country that continually takes for granted its freedom and democracy.

  22. Marco Franck

    We should never out over rule all our options and remain opened with innovative minds such as making considerable investments in materials research and design engineering for advanced reactor technologies, read this article for some insights Advanced Reactor Legislation Can Make America’s Energy Future Brighter http://bit.ly/1Q2gapN

  23. Peter Jedrychowski

    Symple, stoping buying staff from Russia immediately !!! First year will be pain but after just feel good …

  24. Joao Yohanan

    Just make France open it s frikking “doors” to let pass to all Europe, the natural gás that an be stored in Portugal and Spain, where there is 40% (!) of all the storage capacity of Europe!

  25. Cãlin Rednic

    Europe will get independent in this sense only by reducing the fossil fuels consume and for the rest remaining only by having a unified strategy to find at least one alternative provider. I believe that their present actions are set to prevent Europe to do so. They want in the game, but they don’t obey its rules.

  26. Julia Hadjikyriacou

    The EU shouldn’t be enabling unethical practices of fracking for shale gas. Of course diversify but towards subsidised renewable energy-nobody wants to be at the mercy of any one country (or corporation) because then you are beholden to that leader and his level of ethics and greed. We all know oil corporations are greedy and do not care if they destroy people or the earth for profits-the ethical EU must regulate them.

  27. Manolis Karras

    When you are economically United, there is less chance of a war and all people are more prosperous, why the opposite option???

  28. Φιλικη Εταιρια

    Why we do not try to check first which European Country has the biggest supplies in Petrol and Gas …. Greece in Aegean sea and Ionian sea has enormous quantity of Petrol and Gas to cover the whole Europe for more than 100 years , now i wonder why Greeks are not allowed to profit from this discover ??? and i also wonder why our allies Europeans and specially Germans obligate us to buy this land for nothing …. all about the money this is you God …

  29. Daniel Houben

    Renewable energy
    And the Problem is not Russia and to be independent
    The Problem is the destruction of our world by burning Fossil fuels and making trash and waste of it like crazy!
    Greetings from the younger Generation
    And thank you for giving coming generations auch a mess!

  30. catherine benning

    Other than being self sufficient you will always be vulnerable to any supplier. And I would weigh up the reality here. Has Russia asked or pressed you to allow them to have their military machine along with bases on your land? Has Russia demanded you go along with their policies in order to supply this commodity to you? Has Russia screwed you on price? Is Russia committing offence against global warming through their method of extraction?

    Who else will sell you their gas without forcing you to follow their lead this way?

    Think it through and ask who you trust the most with the European future. Those who will suffer from doing so as they are next door. Or those who have no interest in European well being because they are thousands of miles away?

  31. Moreno Mox Mariani

    I find rather strange all this anti-russian politics. Notwithstanding we should go to green energy, we should cooperate with russian instead of cutting every link… just my 2cents.

  32. Vagelis Mitsis

    ΜΕ ΤΙΣ ΔΙΑΦΟΡΕΣ ΚΑΙ ΤΙΣ ΔΙΑΦΟΝΙΕΣ ΣΑΣ ΑΠΛΑ ΚΑΘΥΣΤΕΡΕΙΤΕ ΤΟ ΤΑΞΙΔΙ, Ο ΑΞΟΝΑΣ ΠΑΝΟ ΣΤΟΝ ΟΠΟΙΟ ΘΑ ΕΡΓΑΣΤΟΥΜΕ ΛΕΓΕΤΕ ΣΥΝΕΡΓΑΣΙΑ ΚΑΙ ΠΡΑΣΙΝΗ ΑΝΑΠΤΥΞΗ…

  33. Михаил

    Everyday we listen about Russia and Putin ,what don’t you say something against Saudi Arabia or Turkey ?

  34. SD

    It is much better to buy oil and gas from Christian Russians than the backward islamic Saudis. In Russia women have freedom in Saudi Arabia they don’t. We must stop supporting countries like Saudi Arabia that don’t respect basic human rights.

  35. Monique Saby

    And what about the EU programs of sustainable development, circular economy ?We have to look forward to new kind of energy. Look at the Northern countries, in particular Island !

  36. kool boi n123

    I really like to drink petrol and eat gas pipelines ;)

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