30 June 2008

GPPi Fellow publishes article in “Publico” on Russian gas export

GPPi Fellow Andreas Goldthau published an article in the Portuguese newspaper, Publico. The article entitled, “A Rússia arrisca ficar sem gás para exportar,” (in English “Russia risks being without gas for export”) was published on 27 June, 2008.

The article looks at European energy security and Russian energy policies.
It is estimated that Europe’s energy demand for gas will rise from 560 billion cubic meters (bcm) in 2008 to more than 800 bcm in 2030. Satiating Europe’s present need for gas is none other than Gazprom, the Russian gas giant. This relationship, however, is far from one sided. According to Goldthau, it is reciprocity at work. While Europe depends heavily on Russian gas for energy, Gazprom earns its entire profit from sales to the Western European market. Moreover, Gazprom has no options for markets other than Western Europe, where all its main pipelines lead to. Is Europe’s dependence on Russian gas supply a cause for concern? Not in terms of geopolitics, suggests Goldthau. Rather, the more pressing concern is whether Russia will have enough gas to deliver in the long run. Its major gas fields have matured and new ones are technically highly demanding and costly to develop.

According to Goldthau, Russia has taken Europe’s demands for energy into calculation and has positioned itself strategically as a supplier. Deals between Gazprom and companies in the individual EU member states (Italy, Germany, and France for example) have further entrenched their dependency on the gas giant. The fault lies with the Europeans, argues Goldthau, who busily keep a jealous watch over their 27 national energy policies instead of concerning themselves with the bigger picture. The question that European leaders and businesses need to ask themselves is what can be done to address this energy dependence. Goldthau suggests that letting Gazprom into European energy distribution networks could be a positive move, forcing the supplier to play by ‘European rules.’ Yet, this is a catch-22, as it further strengthens an already strong position of Gazprom as a European energy provider. 

Finally, Goldthau claims that the best way to deal with Gazprom is to reform the European gas market, in order to render more competition possible – a step the Europeans have not fully taken yet. Discussions of using NATO as an instrument for securing European energy supply are sophomoric and send a wrong signal. Instead, the issue should be discussed in terms of markets and supply and demand patterns. 

To read the full article, please click here

For more information please contact Andreas Goldthau

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