European Energy Security: In the Paw of the Bear


By Gustavo Coronel l September 5, 2008
 
Europe is becoming increasingly dependent on Russia for much of its energy requirements. The countries of the European Union already import about 80% of their oil and close to 55% of their natural gas requirements. Of course, not all of these imports currently come from Russia. Half of the oil imports come from the Middle East, about 20% from the Azerbaijan oilfields in the Caspian Sea and the remaining 30% from Russia. On the other hand, already close to half of natural gas imports are coming from Russia. It is estimated that in 25 more years, if no urgent corrective strategic measures are taken, up to 93% of oil and over 80% of natural gas requirements will be imported, most of it from Russia.

The formulation of energy policy in Europe is not yet fully unified and remains at the level of individual states. However, there exists a European Commission and a Commissioner for Energy. In March 2007 the European Union agreed on an integrated Climate and Energy basic policy recommended by this commission, based on the assumption that no individual state can tackle energy problems on its own. This integrated policy calls for: a) increasing energy efficiency leading to a projected 20% energy saving by 2020; b) a 20% increase in the use of renewable energy by 2020; c) use of more nuclear power; d) cooperation among states in times of crisis; e) increasing investments in new technologies; and, f) speaking with a single voice on energy matters.

The energy dialogue between Europe, as an integrated political unit, and Russia is relatively new. It formally started in October 2000 and has had as its main objective how to secure European access to Russian energy supplies. The underlying assumption has been that Europe needs the guarantee of supply while Russia needs the trade and the income, as well as becoming an active reliable player in the Western markets, while working to become a member of the World Trade Organization (WTO).  But the desired outcome for Europe seems to depend on whether it chooses the route of accommodation with Russia or it takes a more pro-active view of its own resources and future energy security.

The other side of this coin is that, by increasing its dependence on Russian energy, Europe will become vulnerable to the political use of this energy by the Russian government. The Ukraine-Russia clash of 2006 over gas prices and the recent serious turn of events in Georgia clearly suggest that Russian energy strategy is becoming more and more influenced by a desire on the part of Russia to regain its lost status as a superpower. So far, the slow progress of the European Union-Russia Energy Dialogue indicates that the diplomatic approach might not be able to provide concrete solutions, while increasing state control of Russian energy companies and the emergence of Gazprom as the third largest oil and gas company in the world indicate that Russia has become, again, a main geopolitical actor.


Source: EIA

As Europe appears mesmerized by its unproductive energy dialogue with Russian bureaucrats, time is going by without a clear alternative strategy to minimize European dependence on Russian energy. An assessment of undeveloped European oil and gas resources made by the U.S. Geological Survey in 2000 estimated these potential resources in a median of 22.3 billion barrels of oil, 312 trillion cubic feet of natural gas and 13.7 billion barrels of condensates (natural gas liquids). If developed, these volumes would be able to satisfy the total consumption of oil in Europe for about eight years and of natural gas for about six years, at the current rate of consumption. Since they would not be the only resources available to Europe, their timely and continuous development would serve to extend the current balance between domestic energy production and imports for almost 20 years. Most of these potential resources seem to be concentrated in two geological areas of Europe: the North Sea Graben, between Germany and the British Isles, and the Norwegian continental shelf, in the Vestford-Helgeland geological basin. Although investment requirements would be very large and development would be both time consuming and technically complex due to environmental considerations, Europe would add a significant domestic base to its energy equation that is lacking today. This development would give Europe breathing room to put in motion alternative energy projects such as wind power, which is already becoming very significant.

The United States can play the role of a catalyst in promoting some of the several steps that are needed by Europe to minimize its dependence on Russian energy supplies, including:

  • Trying to prevent the political encroachment of Russia on the independent Caspian states that supply oil and gas to Europe;
  • Promoting the development of new sources of natural gas identified, or to be identified, in Uzbekistan and Turkmenistan, that could eventually be transported by  pipelines not controlled by Russia;
  • Helping to accelerate the development of domestic European oil and gas deposits, as identified in the 2000 study of the U.S. geological Survey;
  • Support the entrance of Turkey into the European Union, unless there are overriding political reasons not to do so. Turkey is the country through which many of the pipelines carrying oil and gas to Europe can remain independent of Russian control; and,
  • Analyze the pros and cons of reaching some agreements with Iran, to allow Iranian gas to be transported to Europe, in order to open an alternative to Russian controlled gas lines. This is a delicate issue, as Iran is listed as a state sponsor of terrorism by the U.S. Department of State.

The issue of European dependence on Russian energy is not unique. All of the consuming nations are starting to look, more and more, like hostages of the producing nations that are in political control of the resources. A similar situation applies to the dependence of the United States on imported oil, especially oil controlled by politically hostile regimes such as Venezuela. Although plagued by corruption, inefficient management and second-rate technology, these oil producing countries can make life extremely difficult for the primary energy consuming nations.

The eventual solution is not accommodating the hostile regimes at all costs but acquiring a large enough degree of energy independence from them that will permit negotiations on an equal footing. This requires a holistic approach to the development of energy resources that developed nations have been slow to take but one that cannot be delayed much longer if a major global crisis is to be avoided. This approach would include the parallel development of several alternative sources of energy, even if, in doing so, purely economic considerations have to be subordinated to political strategy.



Gustavo Coronel, who served on the board of directors of Petróleos de Venezuela (PdVSA), has had a long and distinguished career in the international petroleum industry, including in the USA, Europe, Venezuela and Indonesia. He is an author, public policy expert and contributor to

SFPPR News & Analysis.