Europeans hooked on Russian gas face tough choices

Europe wants to break its decades-old dependence on increasingly unreliable Russian natural gas supplies amid fears that Moscow is using its vast energy resources as a foreign policy tool.

But there’s no easy way out.

The alternatives are seeking other energy partners in North Africa and the Middle East, reviving nuclear power and investing heavily in renewable energy like biomass and wind power. All bring financial or political challenges that European Union governments may find hard to overcome.
“There will be imports of Russian gas to the EU for a very, very long time, that is beyond any doubt,” said Lars Josefsson, chief executive of Sweden’s state-owned energy group Vattenfall AB. “What you can discuss is how much of our energy supply should come from one source.”

Russia supplies nearly 40 percent of the EU’s imports of natural gas and about one-third of its oil imports — making it by far the biggest outside supplier of energy to the bloc.

Some say that dependence, which dates back to Soviet times, is likely to grow along with the EU’s hunger for energy. The EU imports about 50 percent of its energy, and expects that figure to rise to 65 percent in 2030.

On Dec. 11, Norway set a record for the amount of gas it produced and delivered to Europe in 24 hours — 10.6 billion cubic feet — but the total capacity of the Norwegian pipeline system is 16.7 percent higher, he said.

Nevertheless, analysts say Norway does not have the resources or capacity to replace Russia’s gas exports to Europe. Its North Sea gas production is believed to be near-peak, and expected to decline in coming decades.

And in the Arctic, which by some estimates hides 25 percent of the world’s undiscovered petroleum reserves, exploration comes with high costs and environmental challenges. The Barents Sea is one of the world’s most important fishing reserves.

Stephen O’Sullivan, head of emerging markets research at Deutsche Bank in Moscow, said it remains to be seen whether Europe is willing to pay a premium for secure Norwegian gas to replace insecure Russian supplies.

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