Quantcast

Europe’s Addiction to Russian Natural Gas Complicates Political Action in Ukrainian Crisis

Energy

By Andy Rowell

As the West scrambles for a diplomatic solution to the crisis in Crimea, Ukraine, they know that as they try and negotiate with Russian President, Vladimir Putin, he holds one of the aces in the pack: Russian gas supplies to the west.

Independence Square in Kiev, Ukraine, Feb. 27, where protests raged.
Photo courtesy of Shutterstock

Western diplomatic options are limited because oil and gas are at the center of Europe’s commercial ties with Russia. Although Europe has been trying to wean itself off Russian gas for the last decade, it is still reliant on Russia.

As one British commentator wrote today: “Moscow has its thumb on our economic throat.”

Estimates vary, but some 25-30 percent of European gas comes from Russia, with about half that transiting through Ukraine. Just how dependent Europe is can be seen from the graph, which is from Morgan Stanley:

 

Although still strategically important, Ukraine is less important than in the past, with other pipeline routes via the Baltic Sea or Belarus and Poland being options.

There are already signs that the Russian government, which has a history of using gas exports as an economic lever, is threatening the Ukrainians with higher gas prices.

Mikhail Korchemkin, head of  Pennsylvania-based East European Gas Analysis told Bloomberg that “gas debt is a traditional Russian move to pressure Ukraine. In the past decade the Kremlin used the gas tap as a tool of political pressure on the former Soviet republics.”

And this threat is already pushing up prices. In recent days, oil prices have climbed $2-$3 a barrel. The escalating conflict has already pushed the price of gas futures up 10 percent in early trading this morning, while the benchmark price for oil rose by more than two percent.

Many political analysts are arguing that Germany is the central diplomatic player in the crisis, but its hands are effectively tied due to its reliance on Russian gas. The country is Europe’s biggest gas consumer and Russia’s largest customer.

Russia approved the use of military force in Ukraine over the weekend.
Photo courtesy of Shutterstock

The only good news is that spring is fast approaching after a particularly mild winter, so European gas reserves are said to be high.

Meanwhile, the British position seems to be pretty hypocritical too. Whilst warning that there would be significant costs and consequences to the Russians for their actions, leaked documents reveal that that the British negotiating position should be that “London’s financial centre” should not be closed to Russian businesses, including oil and gas companies.

With impeccable timing, on Monday, Gazprom held its annual meeting in London. And at the weekend, the London Mayor hosted a Russian Maslenitsa or pancake festival whose lead sponsor was Rosnfeft, the vast Russian oil drilling company.

The bottom line is—despite the dire warnings of consequences for Russian by western politicians—the continent is still addicted to Russian gas, so any draconian sanctions or effective political action remains highly unlikely.

Visit EcoWatch’s ENERGY page for more related news on this topic.

EcoWatch Daily Newsletter

The Rio San Antonio, in the headwaters basin of the Rio Grande in New Mexico, will lose federal protections under a new rule. Bob Wick / BLM California

By Tara Lohan

The Santa Fe River starts high in the forests of New Mexico's Sangre de Cristo mountains and flows 46 miles to the Rio Grande. Along the way it plays important roles for wildlife, irrigation, recreation and other cultural uses, and provides 40 percent of the water supply for the city of Santa Fe's 85,000 residents.

Read More
Climate activists protest Chase Bank's continued funding of the fossil fuel industry on May 16, 2019 by setting up a tripod-blockade in midtown Manhattan, clogging traffic for over an hour. Michael Nigro / Pacific Press / LightRocket / Getty Images

By Julia Conley

Climate campaigners on Friday expressed hope that policymakers who are stalling on taking decisive climate action would reconsider their stance in light of new warnings from an unlikely source: two economists at J.P. Morgan Chase.

Read More
Sponsored
Protesters holding signs in solidarity with the Wet'suwet'en Nation outside the Canadian Consulate in NYC. The Indigenous Peoples Day NYC Committee (IPDNYC), a coalition of 13 Indigenous Peoples and indigenous-led organizations gathered outside the Canadian Consulate and Permanent Mission to the UN to support the Wet'suwet'en Nation in their opposition to a Coastal GasLink pipeline scheduled to enter their traditional territory in British Columbia, Canada. Erik McGregor / LightRocket / Getty Images

Tensions are continuing to rise in Canada over a controversial pipeline project as protesters enter their 12th day blockading railways, demonstrating on streets and highways, and paralyzing the nation's rail system

Read More
padnpen / iStock / Getty Images

Yet another reason to avoid the typical western diet: eating high-fat, highly processed junk food filled with added sugars can impair brain function and lead to overeating in just one week.

Read More
Horseshoe Bend (seen above) is a horseshoe-shaped meander of the Colorado River in Page, Arizona. didier.camus / Flickr / public domain

Millions of people rely on the Colorado River, but the climate crisis is causing the river to dry up, putting many at risk of "severe water shortages," according to new research, as The Guardian reported.

Read More