Europe’s dependence on Russian natural gas is considerable. Countries in Central Europe, such as Slovakia, the Czech Republic, Hungary, Germany and Austria, are extremely dependent on Russian natural gas imports, as is Turkey. Germany receives 43 percent of all the natural gas it consumes from Russia; Turkey receives 66 percent of its natural gas from Russia. At the moment, the Soviet infrastructure links the Russian Tyumen, Timan-Pechora and Ob Basin fields with European consumers, as well as the natural gas fields in Turkmenistan, Uzbekistan and Kazakhstan.
[See: Global Market Brief: Skyrocketing Natural Gas Prices and Europe's Economy, Stratfor.com at: http://www.stratfor.com/analysis/global_market_brief_skyrocketing_natural_gas_prices_and_europes_economy ].
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http://www.moscowtimes.ru/articles/detail.php?ID=373835
Both Sides Lose in the Gas War
January 23, 2009
By Yevgeny Kiselyov
It is too early to tell if the gas wars between Russian and Ukraine have ended for good. Although it would seem at first glance that the conflict was put to rest when Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko signed a 10-year gas delivery agreement on Monday in Moscow, it didn't take long for Ukrainian President Viktor Yushchenko's camp to protest the pact.
January 23, 2009
By Yevgeny Kiselyov
It is too early to tell if the gas wars between Russian and Ukraine have ended for good. Although it would seem at first glance that the conflict was put to rest when Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko signed a 10-year gas delivery agreement on Monday in Moscow, it didn't take long for Ukrainian President Viktor Yushchenko's camp to protest the pact.
Yushchenko supporters claim that Tymoshenko didn't have the authority in the first place to negotiate gas prices and sign an agreement with Putin. They accuse Tymoshenko of trading away Ukraine's national interests, including the claim that she supports Gazprom's purported plans for taking ownership of Ukraine's entire gas transport grid. Andrei Kislinsky, the deputy chief of staff in Yushchenko's administration, announced that Tymoshenko and the Kremlin have already created a working group to work out the details of this project. Tymoshenko's main objective in meeting Putin, they assert, was to demonstrate her unconditional loyalty to the Kremlin in exchange for the Kremlin's unconditional support for her in the Ukrainian presidential election in late 2009 or early 2010 (the exact date hasn't been set yet).
It is even possible that on Friday, Ukraine's National Security Council, with Yushchenko as chairman, will declare the gas agreement Tymoshenko signed with Moscow null and void.
It is well known that deliveries of Russian gas were conducted through RosUkrEnergo, a highly controversial intermediary, for the last three years. The company is registered in Switzerland, with a 50 percent stake held by Gazprom and 50 percent owned by private Ukrainian businessmen [!!!] who purportedly profited by manipulating gas supplies and paid big kickbacks to high-ranking officials in Kiev and possibly elsewhere.
RosUkrEnergo has been a major point of contention among feuding political groups for a while; in fact, Tymoshenko made the issue a theme in her 2007 parliamentary election campaign, vowing to eliminate RosUkrEnergo from the transaction. In addition, allegations are occasionally made that Yushchenko has financial ties to RosUkrEnergo.
During the three-week conflict, Gazprom CEO Alexei Miller made a statement implying that Yushchenko had lobbied for RosUkrEnergo's interests and initiated the gas conflict with Moscow when he understood that Tymoshenko was serious about liquidating RosUkrEnergo. Now, as a result of Monday's agreement, RosUkrEnergo has been definitively removed as the middleman. It is difficult to imagine that Yushchenko will simply forgive Tymoshenko for her aggressive moves.
It might seem that Russia came out on the losing end of the gas war.
First, Russia lost because it suffered a huge blow to its reputation as a reliable gas supplier to Europe. Second, Europeans are seriously looking for other suppliers and routes to import gas. For example, an increasing number of German officials are beginning to question if the heretofore celebrated Nord Stream pipeline project, which would pump gas directly from Russia to Germany across the floor of the Baltic Sea, would make Germany too dependent on Russia. [YA THINK??]
The gas war even damaged relations with Russia's traditionally strong European allies such as Serbia, which were without gas for three weeks. Serbs were burning Russian flags, something that just a couple of weeks ago nobody could imagine would ever happen. Even Austria, which has been a loyal buyer of Russian gas since 1968 when it became the first West European country to sign an agreement with Moscow, has started looking for alternative suppliers.
On the other hand, Moscow achieved at least part of what it hoped to accomplish in its conflict with Kiev. Although the Kremlin wasn't able to drive a complete wedge between Ukraine and Europe, the political elite in Kiev, who set their sights high on becoming integrated with Europe politically and economically, suffered a serious blow when Ukraine earned a reputation as an unreliable partner. But Moscow's largest battle gain was destabilizing Ukraine's internal political situation. Kiev's opposing political groups have again locked horns and are bogged down in another serious confrontation.
The Ukrainian media are already discussing the question: Did Moscow offer to support Tymoshenko in her presidential bid? If so, what did she offer the Kremlin in return? Perhaps a rejection of Ukraine's aspiration to join NATO or an extension of the contract for Russia's Black Sea Fleet that is set to expire in 2017?
In reality, these theories should be treated with skepticism. After all, Tymoshenko has no intention of committing political suicide by risking the alienation of the roughly half of Ukraine's voters located in the western part of the country, for whom a pro-Russia policy is absolutely unacceptable. Moreover, she is a quintessential politician -- which is to say an opportunist above all. She might have made various promises to Putin and President Dmitry Medvedev, but it would be naive to think that she would necessarily make good on all of them.
As is often the case, the Kremlin does not have a backup plan if things go wrong. What if the majority of European countries take Kiev's side in its ongoing battle with Moscow? What if Yushchenko follows through and annuls the gas agreement Tymoshenko signed with Putin?
Beyond the gas conflict, what if the global economic crisis cripples Russia worse than it ever expected? What if oil prices fall to $10 per barrel in 2009? What if the ruble exchange rate reaches 50 to the dollar? What if Putin's and Medvedev's ratings fall? If any one of these events were to happen, the Kremlin would have a lot more to worry about than Yushchenko and Tymoshenko. In this case, the Kremlin would quickly forget about its obsession to punish Yushchenko for all of his sins, including his 2004 Orange Revolution, NATO aspirations and arms shipments to Georgia in the August war.
Yevgeny Kiselyov hosts a political talk show on Ekho Moskvy radio and is chief editor of TVi, a new television channel in Ukraine.
On the other hand, Moscow achieved at least part of what it hoped to accomplish in its conflict with Kiev. Although the Kremlin wasn't able to drive a complete wedge between Ukraine and Europe, the political elite in Kiev, who set their sights high on becoming integrated with Europe politically and economically, suffered a serious blow when Ukraine earned a reputation as an unreliable partner. But Moscow's largest battle gain was destabilizing Ukraine's internal political situation. Kiev's opposing political groups have again locked horns and are bogged down in another serious confrontation.
The Ukrainian media are already discussing the question: Did Moscow offer to support Tymoshenko in her presidential bid? If so, what did she offer the Kremlin in return? Perhaps a rejection of Ukraine's aspiration to join NATO or an extension of the contract for Russia's Black Sea Fleet that is set to expire in 2017?
In reality, these theories should be treated with skepticism. After all, Tymoshenko has no intention of committing political suicide by risking the alienation of the roughly half of Ukraine's voters located in the western part of the country, for whom a pro-Russia policy is absolutely unacceptable. Moreover, she is a quintessential politician -- which is to say an opportunist above all. She might have made various promises to Putin and President Dmitry Medvedev, but it would be naive to think that she would necessarily make good on all of them.
As is often the case, the Kremlin does not have a backup plan if things go wrong. What if the majority of European countries take Kiev's side in its ongoing battle with Moscow? What if Yushchenko follows through and annuls the gas agreement Tymoshenko signed with Putin?
Beyond the gas conflict, what if the global economic crisis cripples Russia worse than it ever expected? What if oil prices fall to $10 per barrel in 2009? What if the ruble exchange rate reaches 50 to the dollar? What if Putin's and Medvedev's ratings fall? If any one of these events were to happen, the Kremlin would have a lot more to worry about than Yushchenko and Tymoshenko. In this case, the Kremlin would quickly forget about its obsession to punish Yushchenko for all of his sins, including his 2004 Orange Revolution, NATO aspirations and arms shipments to Georgia in the August war.
Yevgeny Kiselyov hosts a political talk show on Ekho Moskvy radio and is chief editor of TVi, a new television channel in Ukraine.
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http://www.google.com/hostednews/ap/article/ALeqM5ime-eB29lh2E2m_LwNapeBBPHMBAD95QLUP81
Russia, Ukraine sign gas deal, end standoff
By Nataliya Vasilyeva, with contributions from Yuras Karmanau and Maria Danilova in Kiev, Ukraine.
AP
January 19, 2009
MOSCOW -Russia and Ukraine signed a deal Monday that restores natural gas shipments to Ukraine and paves the way for an end to the nearly two-week cutoff of most Russian gas to a freezing Europe.
The agreement was signed by the heads of Russia's state-run natural gas monopoly Gazprom and the Ukraine's gas company Naftogaz. The signing was witnessed by Russian Prime Minister Vladimir Putin and Ukrainian counterpart Yulia Tymoshenko.
Putin said Gazprom had received orders to resume shipments bound for Europe, which had been cut since Jan. 7 as Moscow and Kiev argued over 2009 gas prices and allegations that Ukraine was stealing gas destined for Europe.
Ukraine disputed this, claiming that Russia was not sending enough "technical gas" to push the rest further west.
Officials say the restored gas shipments could take up to 36 hours to cross Ukraine and reach European customers.
Europe gets about 20 percent of its total gas needs from Russia via Ukrainian pipelines, and the cutoff hit hard at some countries, such as Bulgaria and Slovakia, that rely almost entirely on Russia for gas.
The confrontation has deeply shaken Europeans' trust in both Russia and Ukraine as reliable energy suppliers, as more than 15 nations have been forced to scramble for alternative sources of energy. The dispute was further complicated by geopolitical struggles over Ukraine's future and over lucrative export routes for the energy riches of the former Soviet Union.
Tymoshenko and Putin negotiated a preliminary deal for Ukraine to get gas with a 20 percent discount from this year's average European price, which Russia says is $450 per 1,000 cubic meters. That would double the price Ukraine paid in 2008.
However, natural gas prices for Europe are expected to fall sharply later this year, due to the fall in oil prices. By midsummer, Ukraine could be paying as little as $150 for 1,000 cubic meters, said Ronald Smith, a strategist at Moscow's Alfa Bank.
Ukrainian Parliament Speaker Volodymyr Lytvyn said Monday, citing Naftogaz and Russian officials, that the average price Ukraine will pay this year will be around $240 to $250. He did not elaborate.
Russia won a key principle, however, that Ukraine must pay more for its energy supplies. Russia also won't have to pay higher transit prices to Ukraine to use its pipelines.
Putin said in 2010, Ukraine will have to pay full price for Russian gas, and Russia will pay market prices for transit.
In the long term, it is not clear how Ukraine will pay for the huge amount of Russian gas needed to run its outdated factories and heating systems.
Ukrainian opposition leader Viktor Yanukovych said any gas price higher than $250 would be mean a "collapse" of the economy, which is already coping with a collapse of the national currency, a drastic fall in exports and a shaken banking sector.
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BBC New
January 16, 2009
As Germany prepares to welcome Russian Prime Minister Vladimir Putin, the BBC's Berlin correspondent Steven Rosenberg considers how Germany could broker a deal to end the energy dispute between Russia and Ukraine.
Of all the countries in the European Union, it is Germany which has the best relations with Russia. And which, perhaps, is best placed to help negotiate an end to the gas crisis.
The two countries are major trading partners. They are even building a pipeline together - North Stream - which will bring Russian gas to Europe under the Baltic Sea, bypassing Ukraine.
Moscow claims this route will ensure there are no further interruptions to Europe's energy supplies.
Vladimir Putin is best friends with the German chairman of the pipeline consortium - former Chancellor Gerhard Schroeder.
What is more, Mr Putin speaks fluent German from his days as a KGB spy based in Dresden. (Angela Merkel speaks fluent Russian - so no language barrier there.)
But as the energy dispute between Moscow and Kiev drags on, the Germans are growing increasingly frustrated with the Russians.
Prior to Mr Putin's visit to Berlin, Chancellor Merkel warned the Kremlin its credibility as an energy supplier was on the line. She promised to pass that message on personally to Mr Putin during his visit to Germany.
Embarrassed and annoyed by the images of Europeans shivering without Russian gas, the Germans have been threatening to diversify their energy sources.
"Within the European Union, the subject of energy security is now very important," Guenter Gloser, Germany's minister for Europe, said.
"We need to be independent of those supplying our energy - so we need more energy efficiency, we need more renewable energies like solar projects and we need a range of energy partners - not just Russia."
That is easy to say - and it has been said many times before, not only by Germany, but by other EU countries.
History repeating itself
The last time Russia turned off the gas taps to Ukraine in 2006, causing temporary gas shortages further west, European leaders vowed that never again would they allow energy disputes to the east to leave Europe freezing.
The phrase "energy security" became the rallying cry of the EU.
There were calls to boost solar energy, wind power, and make plans to import liquid gas by sea. Anything to ensure that Europe would not be too dependant on the Russians and get caught out twice.
But three years on, it has happened all over the again.
Another dispute between Russia and Ukraine - and once again Europe is freezing. The EU is facing accusations it was too complacent and too divided over European energy policy.
"The usefulness of a crisis is that it forces you to look into the mirror," chief correspondent of Die Welt newspaper Michael Stuermer said.
"That didn't happen. This present crisis could be seen on the radar over the last three months. The signals were coming all the time. I don't think the German government or the EU Commission took note of the seriousness. We didn't learn much from the crisis of 2006."
Micahel Stuermer believes the latest row could nudge the EU to come up with a "coherent energy strategy".
Considering that the European Union currently gets a quarter of its gas from Russia, it is difficult to imagine such a strategy excluding Russia.
Of all the countries in the European Union, it is Germany which has the best relations with Russia. And which, perhaps, is best placed to help negotiate an end to the gas crisis.
The two countries are major trading partners. They are even building a pipeline together - North Stream - which will bring Russian gas to Europe under the Baltic Sea, bypassing Ukraine.
Moscow claims this route will ensure there are no further interruptions to Europe's energy supplies.
Vladimir Putin is best friends with the German chairman of the pipeline consortium - former Chancellor Gerhard Schroeder.
What is more, Mr Putin speaks fluent German from his days as a KGB spy based in Dresden. (Angela Merkel speaks fluent Russian - so no language barrier there.)
But as the energy dispute between Moscow and Kiev drags on, the Germans are growing increasingly frustrated with the Russians.
Prior to Mr Putin's visit to Berlin, Chancellor Merkel warned the Kremlin its credibility as an energy supplier was on the line. She promised to pass that message on personally to Mr Putin during his visit to Germany.
Embarrassed and annoyed by the images of Europeans shivering without Russian gas, the Germans have been threatening to diversify their energy sources.
"Within the European Union, the subject of energy security is now very important," Guenter Gloser, Germany's minister for Europe, said.
"We need to be independent of those supplying our energy - so we need more energy efficiency, we need more renewable energies like solar projects and we need a range of energy partners - not just Russia."
That is easy to say - and it has been said many times before, not only by Germany, but by other EU countries.
History repeating itself
The last time Russia turned off the gas taps to Ukraine in 2006, causing temporary gas shortages further west, European leaders vowed that never again would they allow energy disputes to the east to leave Europe freezing.
The phrase "energy security" became the rallying cry of the EU.
There were calls to boost solar energy, wind power, and make plans to import liquid gas by sea. Anything to ensure that Europe would not be too dependant on the Russians and get caught out twice.
But three years on, it has happened all over the again.
Another dispute between Russia and Ukraine - and once again Europe is freezing. The EU is facing accusations it was too complacent and too divided over European energy policy.
"The usefulness of a crisis is that it forces you to look into the mirror," chief correspondent of Die Welt newspaper Michael Stuermer said.
"That didn't happen. This present crisis could be seen on the radar over the last three months. The signals were coming all the time. I don't think the German government or the EU Commission took note of the seriousness. We didn't learn much from the crisis of 2006."
Micahel Stuermer believes the latest row could nudge the EU to come up with a "coherent energy strategy".
Considering that the European Union currently gets a quarter of its gas from Russia, it is difficult to imagine such a strategy excluding Russia.
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http://www1.whdh.com/news/articles/world/BO101369/
Gas-starved EU nations seek end to energy crisis
Associated Press
January 14, 2009
MOSCOW -- The leaders of several gas-starved European nations traveled to Ukraine and Russia on Wednesday, pressing them to restore supplies as the EU threatened both with legal action for halting energy deliveries in the midst of winter.
But Ukraine's natural gas company said for a second straight day it would not send Russian gas along to Europe. It claimed that Russia's gas monopoly Gazprom was trying to force it to cut service to parts of Ukraine in order to send the gas along.
For his part, Russian Prime Minister Vladimir Putin accused Ukraine of holding European nations hostage and insisted the EU should not accept Ukraine's claims. He spoke as met with the prime ministers of Slovakia, Bulgaria and Moldova at his residence outside Moscow.
[ACTUALLY, WE WOULD ARGUE THAT THE NARROW-MINDED 'GREENIES' OF EUROPE ARE THE ONES HOLDING THE CITIZENS OF THE EUROPEAN UNION ENVIRONMENTAL HOSTAGES, GIVEN THE GREENIES' PREFERENCE FOR NATURAL GAS].
"No matter what papers others provide, I'll burn them in the oven," he told the visitors. "We opened the tap, and are ready to supply gas, but on the other side, the tap is closed.
"Nobody, no transit country, has the right to use its transit location to take other customers hostage," Putin declared.
Slovakian Prime Minister Robert Fico said "Ukraine is losing the trust of European partners because of its behavior."
"The most unpleasant part is that millions of Europeans feel like hostages and are truly suffering," added Bulgaria's Sergei Stanishev.
With no end to the politically charged dispute in sight -- despite a weekend agreement that sent teams of EU monitors out to pumping stations to keep tabs on the gas flows -- the EU was fed up.
European Commission President Jose Manuel Barroso warned Gazprom and Naftogaz, Ukraine's state-run gas company, that he will urge European energy companies to sue them unless they move quickly to restore gas supplies.
"If the agreement is not honored, it means that Russia and Ukraine can no longer be considered reliable partners for the European Union in matters of energy supply," Barroso told the European Parliament.
[WE ALWAYS KNEW THAT BARROSO WAS AN 'EINSTEIN'].
Gazprom stopped sending gas into Ukraine's pipeline system on Jan. 7, alleging that Ukraine was siphoning off supplies destined for Europe. Ukraine has denied the charges, claiming that Russia has not sent enough so-called "technical gas" to pump the rest of the gas west to Europe.
Gazprom cut off all gas supplies to Ukraine itself on Jan. 1, amid a clash over what price Ukraine should pay for gas in 2009.
The dispute has affected millions of people, mostly in eastern Europe and sent at least 15 European nations scrambling for heat. Thousands of businesses have had to shut down or cut production, forcing workers into involuntary layoffs.
Russia opened a tap to Ukraine on Tuesday after the hard-won EU deal to monitor gas flows, raising hopes across Europe.
But Ukraine's gas company Naftogaz did not deliver the gas to Europe, saying Gazprom demanded that it use a technically arduous route which would force Ukraine to halt supplies to a large swath of its own territory. Ukraine uses Russian gas, but also produces natural gas on its own and has large stockpiles of the fuel.
Naftogaz head Oleh Dubina said Gazprom made the same request again Wednesday -- and he would not agree to halt supplies to Ukrainian consumers.
"Unfortunately, we answered the same way: we cannot leave our regions without gas," Dubina told reporters.
Gazprom has rejected the claim, saying the route was fine.
Earlier in Kiev, Fico urged Ukrainian Prime Minister Yulia Tymoshenko to hold talks with Putin to resolve the dispute as soon as possible.
"We ask for talks between the prime ministers of Russia and Ukraine. This is an issue that is very important for us," Fico said.
Russia and Ukraine are deeply at odds over what Ukraine will pay for Russian gas in 2009. Ukraine last year paid $179.50 per 1,000 cubic meters of gas and its president said Tuesday that Ukraine will pay no more than $210 in 2009.
Russia wants Ukraine to pay market price for gas, about the $450 that European customers pay.
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http://www.themoscowtimes.com/article/1009/42/373535.htm
Gas Woes Threaten Economies [and damage relations that Russia has with certain countries”]
By Gordana Filipovic
Moscow Times
14 January 2009
-- A weeklong cut in gas supplies has prompted concern that some Balkan countries already hit by the world financial crisis could see dimmer economic prospects and lower job numbers as a result.
Supplies to Europe have been cut off for almost a week in freezing temperatures after Russia turned off the tap to Ukraine in a long-running feud. Even though a deal was reached Monday, the second in two days, gas supplies still failed to restart on Tuesday.
The Balkans took Europe's biggest hit, with hundreds of thousands of households initially losing heat and dozens of businesses forced to halt production.
Analysts said it was premature to assess the impact on growth, but lower industrial output for the month of January was possible. The midterm outlook depends on global economic conditions and the impact of falling global demand.
"Given lower demand, many firms have piled stocks in the last few months, and I don't think demand or sales will suffer," said Raiffeisenbank analyst Zdeslav Santic in Zagreb.
"But some producers, like those of construction materials, may be forced to reduce or stop production, which would lead to job losses," he said.
The economic impact could become more visible if the latest deal in restoring gas supplies hits a snag, especially for countries with little or no reserve, said Vladimir Gligorov of the Vienna Institute for International Economic Studies. "Croatia has had its own reserves to rely on at the time of crisis, Bulgaria may not have sufficient gas reserves, but they've got the European Union to turn to for assistance and Serbia has no reserves and no one to turn to," Gligorov said.
With politicians focusing on restoring heat to households, some factories reliant on natural gas have halted production. After a few days, Hungary and Germany agreed to sell some gas to EU-hopeful Serbia, where drugs company Hemofarm, owned by Germany's Stada, and fertilizer manufacturer Azotara suspended production.
The gas disruption has hurt the backbone of Bulgaria's industry, where steelmakers, chemical and fertilizer producers as well as food processors use natural gas. The national employers' organization has estimated daily losses at 500 million levs ($367 million), but direct losses were lower, at around 13 million levs a day, Economy Minister Petar Dimitrov said.
Neighboring Macedonia's main steel exporter halted work.
In Croatia, steel mills, sugar plants, chemical industry and construction material producers have been the most exposed as they rely on gas, the Croatian Chamber of Commerce said.
Incidentally, the gas outage even caused Sarajevo's eternal flame -- a monument to victims of World War II -- to go out last week.
The flame came on again when Hungary started shipping gas to Bosnia.
But a major impact on the Balkans' economic growth is seen as unlikely.
"The gas crisis is likely to have a modest measurable impact on growth in the first quarter, and the impact will be more sizable if the shutoff continues beyond this week," said Richard Segal, a UBA Capital analyst based in London.
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1137645
Rhetoric versus reality. Russian threats to European energy supply
By Andreas Goldthau
Energy Policy (36), 2008
As more than 50 per cent of overall European imports originate from Russia, fears have been expressed that the Kremlin could use energy resources as a foreign policy tool. A thorough assessment of domestic consumption, production and investment volumes however reveals that Russian supply will have difficulties in matching growing domestic and European demand. Hence, as the author argues, the threat to European gas supply does not lie in geopolitics, but rather in a lack of investment in the Russian upstream sector.
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http://www.radionetherlands.nl/currentaffairs/eur070315mc
Europe's dwindling gas reserves
by Wendy Braanker
Radio Netherlands Worldwide
[Netherlands does not import any Russian gas. Not yet. According to the President of the board of Dutch company Gasunie, Marcel Kramer, if it does happen, it will be an extremely small amount. The Netherlands has enough gas reserves for around 30 years in its gas fields near Slochteren in the north of the country.]
15-03-2007
Gas will eventually run out in Europe, not this year, not next year but soon. Delegates to a European gas conference currently being held in Amsterdam have concluded that the only way to solve the gas problem is for Europe to strengthen ties with countries such as Russia and Iran. However, not everybody is happy with that conclusion.
Europe depends on Russia for a quarter of its gas imports. Delegates to the Amsterdam gas conference, called Flame, concluded that the demand for gas will only increase, while European gas reserves are dwindling.
In an address to Flame, Professor Jonathan Stern from the Oxford Institute for Energy Studies said:
"The amount of gas extracted from within Europe will start to diminish around 2015. And that will cause problems... we will have to increase our imports from other countries."
Strengthen ties
European Union countries have to compete with the United States and Asian countries for gas supplies and the demand for gas has sharply risen throughout Asia and in the US. Solar and wind energy can meet some of Europe's energy needs but more time is needed if alternative energy is going to be a substitute for gas.
Professor Stern says the lack of alternative energy sources necessitates stronger European ties with Russia and energy producing countries in the Middle-East, and he comments: "It's irrelevant if we agree or disagree with the Russians, the Iranians or another possible gas exporters".
The professor of energy studies says Europe needs to stop telling other governments how to run their countries:"
That's the reason why dialogue between Europe and those countries is so problematic."
Power politics
In other words: European politicians and companies have to stop trying to force their way of doing things on gas exporting countries. Because of the increased profits generated by gas exports, these countries have increased their political power. And it is precisely the political power wielded by Russian President Vladimir Putin which is causing concern among European politicians and companies.
There is criticism from another corner as well. This week, Italian human rights activists - they are not the first - called on Italian Prime Minister Romano Prodi not to forget human rights in his trade discussions with Russian President Putin. However, energy is sure to play an important role in the talks between Mr Prodi and his Russian counterpart. Italy's energy giant En is on the point of signing a contract with Russia's state energy company Gazprom.
Soothing words
Gazprom, the world's largest gas company, was also at the Flame conference in Amsterdam and it tried to persuade Flame delegates that the Russian state-owned company is a trustworthy partner. [REALLY???] Sergei Korovin, Gazaprom's vice-president of international affairs and head of international projects, says as the world's largest gas producer and exporter, Gazprom will continue to operate in a responsible manner on the national and international gas market. Soothing words from Gazprom, probably aimed at calming fears that many companies have about investing in Russia ever since Gazprom forced Shell Oil to halve its share in a large-scale gas project on the Sachalin peninsular in December 2006. Shell was financially compensated for giving up 50 percent of its stake in the project [EXPROPRIATION OF FOREIGN ASSETS] but oil and gas companies want to build up their own reserves in order to guarantee a secure future. Money is not as important.
However, not dealing with Russia is not an option according to dozens of speakers at the Flame conference. Europe needs Russian gas. There are no alternatives.
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http://cleantechlawandbusiness.com/cleanbeta/index.php/629/europes-worsening-energy-crunch/
Europe’s Worsening Energy CrunchClean Beta
July 25, 2008
The European Union produced 9% less energy in 2006 than it did in 1997. Meanwhile, consumption rose by 7% and net imports rose by 29%. In 1997, the energy dependence rate stood at 45%. A decade later, it stands at 54%, according to the Statistical Office of the European Communities.
In 2006, the EU imported 2.4% of its total energy supply (1,010 million tons-of-oil-equivalent, or TOE) than the previous year. Oil and gas accounted for about 60% and 26% respectively of all imports. Russia was the primary supplier of crude oil and natural gas were Russia (33% of oil imports and 40% of gas imports in 2006).
Despite reduced energy consumption in 2006, energy production fell 2.3%, which drove up net imports by 2.4% in 2006 and the energy dependence rate to 54% from 53% in 2005.
Finland consumed roughly 10% more energy in 2006 than the preceding year. For the five largest energy consumers, which accounted for nearly two thirds of total consumption in the EU, consumption moved +0.5% in Germany, -1.2% in France, -1.6% in the United Kingdom, -0.6% in Italy and -0.5% in Spain.
Europe has actually gotten more dependent on energy imports in the past few years, especially in Cyprus, Malta, Luxembourg and Ireland. The countries with the least dependency on energy imports were: Poland (20%), the United Kingdom (20%), the Czech Republic (28%) and Romania (29%). More importantly, Denmark has achieved the unthinkable and become a net exporter of energy.
The lion’s share of Europe’s energy imports are oil and gas, which accounted for 60% and 26% respectively of net imports last year. Russia was the largest supplier of crude oil and natural gas, providing nearly a third of oil imports and more than a third of natural gas imports in 2006.
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