Russia hardens EU resolve to seek new energy supply

Renewed tension between Russia and Belarus has yet to disrupt energy flows, but still it has sharpened Western Europe’s desire to curb dependency on Moscow if it possibly can.

It provides roughly 25 per cent of western Europe’s gas. In addition, the former Soviet Union, including Russia, provided 35 per cent of crude and refinery feedstock products for western Europe and 17 per cent of refined oil products in the first quarter of this year, according to the International Energy Agency (IEA).
“Clearly there are seaborne alternatives where Russian supplies are to be curbed,” said David Fyfe of the Paris-based IEA. “But central European refiners served by the Druzhba pipeline might struggle to immediately replace the 1.2 million barrels per day of crude coming via this route.”

The Druzhba – or friendship pipeline – ships Russian oil through Belarus to Germany and Poland and through Ukraine to central Europe.

Oil flows through Belarus were halted for three days in January during another pricing dispute with Russia.

Such disputes have also focused Russian attention on alternative routes for its oil and gas following disputes with existing transit states and analysts say Russian proposals could have a better chance of being built than European projects.

Some are sceptical about the EU-backed Nabucco pipeline, for instance, which would transport gas from the Caspian, central Asia, rather than from Russia.

“A number of factors are stacked against Nabucco in the scramble for available gas,” said Mark Rowley, an oil and gas lawyer at Baker Botts’ London office. “The South Stream pipeline and proposed extension of Blue Stream are both backed by Russian gas producers with available gas to transport.”

Apart from the Caspian, Europe has also been looking to Norway and Algeria for supplies, but their reserves are a fraction of Russia’s.

Russia holds reserves of 47.65 trillion cubic metres (tcm), according to the BP Statistical Review, published in June.

Algeria, by contrast, holds 4.5 tcm and Norway 2.89 tcm.

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