EU/Russia: Energy To Top Agenda At Helsinki Summit

EU leaders will attempt to convince President Putin (center) to deal with the bloc as a whole, rather than as individuals (file photo) (CTK) WASHINGTON, November 23, 2006 (RFE/RL) -- Leaders from the European Union and Russia will meet in Helsinki on November 24 to attempt to iron out their differences. Much of the discussion will be focused on energy.

Now that the vast Norwegian fields are rapidly being depleted, the EU needs a steady and reliable supply of natural gas. And liquefied natural gas (LNG) deliveries from Algeria and Qatar are not enough to satisfy Europe's spiraling demand.

EU High Representative for Common Foreign and Security Policy Javier Solana said on November 20 that the scramble for territory of the past may be replaced today by the scramble for energy.

"We have to take our energy from where we find it. Although energy markets are increasingly global, much of the world's gas and oil reserves are in unstable and, often, undemocratic parts of the world," Solana said.

Energy Competition

Europe's long-term energy problems could be further exacerbated by predictions that, by 2016, the United States, which presently consumes more natural gas than any other country in the world, will need to import huge quantities if it intends to maintain current levels of consumption.

If those predictions prove accurate, the United States could come into direct competition with its European allies for Russian gas -- something that could have a dramatic effect on geopolitics.

That, according to Solana, could damage the Western alliance. "The scramble for energy [could become] pretty unprincipled," he said. "That is likely to make it more difficult to secure support from key partners for our wider foreign policy objectives."

Problems Meeting Domestic Demand

But does Russia even have enough gas to give? Many experts have said that in only a few years Russia will not be able to meet both its domestic and foreign commitments for gas.

A report prepared by Russia's Economic Development and Trade Ministry warns that, by 2007, the state-controlled natural-gas monopoly Gazprom will not be able to meet export commitments without depriving its domestic customers of gas.

According to the November 15 edition of the "Kommersant" daily, the Kremlin has already decided not to raise domestic prices for gas until after the 2008 presidential election -- although neither the Kremlin nor Gazprom have confirmed this.

Energy Charter

What exactly the EU can do to get Russia to play ball is unclear. Moscow, it seems, is more interested in cutting deals with individual European countries than with locking itself into a long-range agreement with the entire EU.

Does Gazprom's network have any capacity to spare? (epa)

Instead of pressuring Russia to ratify its Energy Charter, the EU will likely limit itself to convincing Moscow that it is far better to allow independent Russian gas producers access to Gazprom-controlled pipelines than to burn it off. By some accounts, over 80 billion cubic meters of gas are burnt off every year by Russian oil companies, who are unable to distribute their gas.

The use of Gazprom's gas pipelines by independent producers raises two significant issues.

Gas obtained from oil drilling first needs to be processed before it can enter the pipeline system, and there might not be enough gas-processing plants to meet this demand. And it isn't clear whether the existing Gazprom pipeline system can handle an increased quantity of gas.

Playing It By Ear

The Kremlin, given its problems supplying the domestic market, is keeping its options open. Russia would be happy to expand its role on the lucrative gas spot market while taking co-ownership of low-pressure distribution pipelines in selected European countries.

Italy's energy giant Eni recently signed a contract with Gazprom for deliveries of some 24 billion cubic meters of gas per year and, as an incentive, gave Gazprom the right to take over 10 percent of its domestic distribution network.

The gas problems could also force the EU into overcoming its aversion to nuclear energy. In the 1980s, a powerful German Green movement pushed Germany into banning nuclear power, making the country dependent on Russian gas and the rest of Europe wary of nuclear energy.

Would the EU find this acceptable? France, which is the largest user of nuclear power in Europe, will be happy to go along, while Italy, which seems amenable to having Gazprom own part of its domestic gas-distribution network, might reconsider its stance.

And the intense competition for gas could also force Europe -- and perhaps the United States -- to take the painful step of cutting back on their consumption of hydrocarbons.