26.01.2022. Experts Wahid Machram, market analyst in Dubai; Samuel Ramadi at Oxford University, UK. and TRT Roundtable host David Foster in London made important points. Here’s a key assessment I made.:
There is a new and growing asymmetry between the European Union and Russia in energy supplies – one increasingly favoring Moscow.
Europe has opened itself to energy blackmail. The present winter 2021-22 gas shortage and skyrocketing prices are only one part. There is also the real possibility of Putin cutting off the pipeline gas he is still supplying in the event that Europe, esp. Germany, opposes any Russian invasion of Ukraine.
About the new EU-Russia growing energy asymmetry:
- On the demand side, Germany and Europe generally increasingly need natural gas, and are growing more dependent on Russian supplies, contrary to the promises of rapid progress to a carbon-free future of the German Green Party and others. The EU, and especially Berlin, have adopted ideologically-determind, technologically unrealistic and expensive energy-transition policies, with little concern for energy-supply security. This has made Europe increasingly dependent on Russian gas imports – 40% at present of total gas imports,
- Meanwhile, on the supply side, Russia, the major European supplier, is increasingly finding ways to diversify its gas customer base away from Europe, to the Far East, especially to China, and to Eurasia generally. It also has new outlets for its vast Arctic gas resources by converting it to LNG that can go by ship to anywhere in the world.
Hence, the EU now finds itself in a precarious situation of overdependence on Russian gas while Russia is less dependent on exports to Europe, Thanks especially to Germany’s pro-Moscow gas policy – building both Nord Stream 1 and North Stream 2 to assist Gazprom to free itself from the “dependence” of having to export via the older pipelines crossing Ukraine, a country it is at war with, Europe finds itself in a precarious position.
After the previous instances where Putin cut off natural gas supplies to Europe via Ukraine, in 2006, in 2009, and after his invasion of Ukraine in 2014-15, what did the EU do to prepare for the present gas-and-geopolitics crisis?
Although they have taken positive steps to liberalize gas markets, reducing Gazprom’s opportunities to charge monopoly prices and impose terms on buyers, there has been no strategic EU gas reserve established to weather any Putin-enforced gas interruption crisis. In fact there is less storage capacity than previously. As coal mines and the last of 17 perfectly safe German nuclear plants are now being demolished, the illusion that especially wind could take up the slack led the UK to close storage facilities, and the EU somehow thought it did not need strategic natural gas storage. Meanwhile, Germany has long refused to build a large-scale LNG import terminal to provide some balance against its constantly deepening dependence on Russian pipeline gas deliveries.
Most especially, the EU has not taken advantage of the vast storage capacity laying dormant in Ukraine, something I proposed last April 2021 – the possibilities of Ukraine serving as the “Central Bank for European Energy” (Tagesspiegal, Berlin Op-Ed) for a new European strategic storage system..
The USA – across at least the last three administrations, no matter Republican or Democrat, has consistently warned the European leadership and most especially the German leadership, for three consecutive German chancellors now – first Schröder, then for16 years Merkel, and now Scholz that Putin can and will cause an EU energy crisis. Especially Berlin has always thought – and still clings to this hope – that by abandoning their dependence on Ukraine for gas supplies from Russia, they would reliably receive Russian gas direct to their country. But, now Putin has cut Germany’s supplies well below usual as well. He is now using Europe’s gas dependence and his energy partnership with Germany as leverage; he is weaponizing his increasingly asymmetric gas-supply position as leverage to attack and dominate Ukraine.
The European Union’s leadership – not only Germany – has left the continent woefully unprepared for the energy crisis it is now facing, a refusal of Putin and Gazprom to sell any additional gas beyond a couple long-term supply contracts it would pay penalties for not fulfilling.
[Some post-publication editing for clarity and typos, 30jan22 – T. O’D.]