Like it or not, Europe needs Russian gasby Derek Brower / February 28, 2009 / Leave a comment
Published in February 2009 issue of Prospect Magazine
Russia’s annual gas row with Ukraine erupted again in December, shutting down exports for nearly two weeks. Brussels fretted, Moscow and Kiev swapped insults and their two state-controlled energy firms—Gazprom and Naftogaz—bickered, before reaching a compromise. (Russia wanted to raise Ukraine’s bill in line with European prices, while Ukraine wanted more money to transport the gas.) The dispute, more serious than its predecessor in 2006, will trigger yet more debate about Europe’s energy supplies. Three years of tough EU rhetoric, however, have yielded little progress. The EU’s flawed strategy—that market liberalisation will bring energy security—has been undone by energy companies careless of the continent’s broader long-term needs as they pursue short-term profits.
Gas is a particular flashpoint. It burns more cleanly than oil and coal, which is important for plans to slow global warming. Its power stations are also cheap, which energy companies like. This has pushed up demand: despite the recession European consumption will shoot up from 493bn cubic metres in 2010 to an estimated 625bn in 2030. Dwindling local reserves will see Europe’s gas imports almost double.