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Europe’s Dependence on Russian Natural Gas

09 Apr

As tensions build between Russia, the U.S., and Europe over the Ukraine, the issue of Europe’s dependence on Russian natural gas as an energy source once again emerges. The following is from The Economist, April5, 2014, which can be found on the internet here. Here are first two paragraphs of that informative article, along with several illustrations

WHEN Vladimir Putin was bribing Viktor Yanukovych, then the president of Ukraine, to turn down a trade deal with the European Union last year, one of the sweeteners was cheap gas. The copious Russian gas Ukraine burns through every year—it is a profligate user of energy—would be priced at just $268.5 per thousand cubic metres (tcm), which for 2013’s total of 28 billion cubic metres (bcm) works out at $7.5 billion. Since February’s revolution ousted Mr Yanukovych, gas has become a stick, not a carrot. On April 1st Alexei Miller, the chief executive of Russia’s gas giant, Gazprom, said that theprice of Ukraine’s gas was going up by 44%, to $385.5 per tcm. This is ominous news for Europe. Ukraine already owes Gazprom $1.7 billion, according to Mr Miller. If Ukraine continues not to pay its bills—and without outside help, it cannot—Gazprom can cut it off. Such a dispute need not, in principle, have any effect on the gas that flows through Ukraine to other countries farther west (see map). But if Gazprom reduces the flow of gas to reflect the fact that Ukraine no longer has a right to its 28bcm, and Ukraine takes some of that gas anyway, or if Gazprom shuts down the pipelines going through Ukraine completely, Europe’s supplies get hit. Europe gets 24% of its gas from Russia, and half of that—80bcm a year—passes through Ukraine. An argument between Russia and Ukraine led to the pipelines shutting down for two weeks in January 2009, to much consternation downstream.

The % of a country's total gas needs that are supplied by Russia

The % of a country’s total gas needs that are supplied by Russia

A map of the very complex natural gas delivery system, (from The Economist, 4/7/14)

A map of the very complex natural gas delivery system,
(from The Economist, 4/7/14)

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