Russia Faces Uncertain Times Selling Natural Gas to Europe

The latest
round of pipeline politics
between Moscow
and the European
Union
masks a new reality:
Changes
under way in Europe are likely to
damp the Continent’s appetite for
Russian gas, weakening Russia’s
much-vaunted
status as an energy superpower.

Russian and EU leaders met Friday in the eastern Russian city of Khabarovsk to heal a relationship badly damaged by the January gas cutoff of Russian gas that left thousands of people in Eastern Europe shivering in their homes.

The EU sought assurances that would never happen again. Russia refused to provide any. Instead, President Dmitry Medvedev said Moscow doubted that transit state Ukraine had enough money to pay for the gas Russia supplies, hinting at more disruptions to come.

But behind the bravado, Russia is worried. Europe’s economic slowdown has led to a collapse in demand for natural gas, while January’s crisis has triggered a new push by EU states to find alternatives to Russian imports.

Added to that, many industry analysts are revising down their long-term projections for natural-gas use in Europe, with far-reaching implications for Russia’s resource-based economy.

WSJ