The EU should not fear Russia’s
“gas weapon”
By Rick Van Assel
One of the key priorities of the
European Commission’s Energy Union is to improve energy security.
This entails that EU countries can enjoy energy supplies without
interruptions, and at an affordable price. In the past years, energy
has become more and more a geopolitical weapon, as the current
Ukraine-Russia crisis shows. This, of course, is not a good evolution
with regard to the goal of achieving more energy security. However,
European citizens should not fear that Russia will turn off the gas
switch to Europe entirely when the Kremlin wants to achieve other
policy goals, for example today in Syria. This view is too narrow
minded, because there are several limitations to the so called energy
weapon of the Russian Federation.
Being dependent on energy imports is
not abnormal. Countries cannot do magic and create oil and gas fields
out of the blue. It is not even necessarily a bad thing, but
therefore two conditions need to be fulfilled: there should be
diversification of both suppliers and supplies. For the European
Union (EU), this becomes a problem when we look at some figures
regarding gas imports. Eurostat figures reveal that in 2013 more than
two thirds of natural gas imports (69%) came from only two suppliers:
Norway and Russia. Especially Russia has a very large share in the
EU’s gas imports. In 2013 our eastern neighbours accounted for 39%
of the entire gas imports to the EU. You do not have to be an award
winning scientist to see that such a situation is not really healthy.
Thus, should EU member states’
governments and citizens be scared? Might Russia make abuse of the
European Union’s dependence on its gas? Could Russia threaten the
EU by claiming that it will turn off the gas switch whenever the EU
is standing in the way of a Russian foreign policy goal? In theory it
could, but it is highly unlikely.
Firstly, the dependence is not just a
disadvantage for the European Union alone. Russia gets an income out
of gas sales. A high income. 68% of Russia’s export revenues in
2013 were generated through selling oil and gas. Russia’s federal
budget is highly dependent (about 50%) on the export of oil and gas.
And the most important client of Gazprom, Russia’s state owned
energy company, is the EU. From an economic point of view, it would
therefore not be wise to cut off gas supplies.
This brings us to the second
argument, which has been pointed out before by Thijs Van De Graaf, a
Belgian professor in global energy politics. One might say that
Russia should then sell its gas to other, non-EU countries. That way
it could make up for the loss of income it gets from EU states.
However, this is not possible. Unlike oil, which is a liquid and gets
round the world through oil tankers, gas is mainly transported
through pipelines, and not every country has a direct link with the
Kremlin. Russia cannot send a lot of extra gas to countries with
which it already has a pipeline link, because they might not have
enough storage infrastructure. Another option might be sending the
gas through Liquefied Natural Gas (LNG) tankers, but this is a very
expensive option. Building new pipelines is a long and expensive
process, so Russia would remain tied to the countries with which it
has direct links through pipelines for its gas relations.
In 1973, the world got hit by a
massive oil shock. After the Yom Kippur war, where the United States
supported Israel in a war against Egypt and Syria, the Arab members
of the Organization of the Petroleum Exporting Countries (OPEC)
started an oil embargo against several countries, among which the
United States and the Netherlands. The consequences were severe. Oil
prices quadrupled and production declined. If Russia would impose a
gas embargo on the EU, the consequences would not be the same as with
the 1973 oil embargo, and not because the scale would be different.
From 1973 up until today, oil was and
still is the driving force for the entire transportation sector.
There was no alternative, which explains why prices soared. For
natural gas, things are different, as Van De Graaf pointed out. The
energy services that are running on gas, are also being driven by
other forms of energy, such as coal or nuclear energy. Russia could
threaten the EU that it would cut gas supplies, this would (in the
short term) not hurt our way of life because there are substitutes
for natural gas, which was not the case in 1973 with the oil embargo.
A last argument relates to Russia’s
international reputation. If Russia were to cut off gas supplies for
its own political benefit, this would, without a doubt, damage its
reputation. Gas demanding countries might be thinking twice to sign
an agreement with Gazprom if they see that the guarantee of supply is
not a full 100%. Therefore it would not be wise of Russia to stop gas
supplies, let alone threaten with it. Because this might jeopardize
future investments, which in turn could have a negative impact on the
Russian federal budget. To put it simple: doctor Putin might not want
to threaten his patient’s life, because he might not be getting any
more patients afterwards.
All this does not mean that Russia
does not have an appetite of influencing other states’ internal
policies through its role as gas supplier. In 2013, Russian president
Vladimir Putin promised a discount on the gas price for Ukraine if
Viktor Yanukovych, Ukraine’s former president, would drop an
association agreement with the European Union. We all know what has
happened since then. The real Russian gas power thus lies in setting
the prices and allowing discounts. That way it can still have an
influence in third countries and shape its own interests. This
analysis just shows that the gas ties between the EU and Russia are
too big to start messing with them. At this time, nor Russia, nor the
EU would gain something by cutting off gas ties. And if this game
were to be played after all, there would only be losers.
