The tense situation in Ukraine these days can be attributed to a series of causes as they are discussed at large on a variety of media outlets worldwide, but it is beyond the scope of this post to identify them and even further develop on them. This post aims to put into perspective what the Ukrainian crisis means for the EU from an energetic perspective, and question how the general state of the situation is going to unfold for EU-28 in the coming years.
Generally, in the context of the international resource dispute the EU-28 countries have started to change their long term energetic strategies by diversifying their energy mix and resource partners. For example, in the wake of the Fukushima nuclear disaster Germany and Sweden have started decommissioning their nuclear reactors; while Denmark is progressively pushing for an ever higher share of renewables in its energy mix.. France and UK are making a move towards gas being it conventional or unconventional. At large, European nations are moving towards less carbon intensive fuels.
The position of the EU countries in the Ukrainian crisis is delicately linked to the EU-Russian relations in a variety of aspects among which the geo-resource position of Russia as a coal, oil and gas exporter. This position is arguably of strategic importance for the EU importing countries especially in areas concerning gas. The dependence on Russian gas can be historically traced back to the end of World War II, but more recent events (the end of the Cold War) have tighten the strings and lead to bilateral cooperation. After the Cold War, European powers envisioned to unify the energy market in the same manner they’ve done with the Coal and Steel Community after the World War II, and thus further strengthen their position as a unified economic power in the international markets. By intending so, France made the first move and engaged Denmark and Germany alongside in a dialogue with Russia about building a gas pipeline extending from Russia all the way to France. This pipeline would feed-in the energetic needs of the transit countries and France, in the context of an increasing energy demand in the West European nations in late 1970s. At the time when this project was initiated it was rather ambitious and risky for Europe, which is why eventually it did not take off. In the coming years France moved on in building a nuclear fleet and Germany exploiting its coal resources, but mid 1990s brought back the need for cheap and reliable fossil resources in Europe. This reopened the EU-Russian dialogue for the Russian gas pipeline (Nord Stream) which was launched in 1997 and inaugurated in 2011. This pipeline accounts for about 20% of the European gas imports from Russia, a share which is prone to increase year by year (CIEP, 2013).
With the expansion of the Nord Stream pipeline in late 2013 the Ukraine transit gas pipeline is facing pressure. Even if absolute imports via Ukraine have changed little over the past years, the share of Russian gas imports in Europe via Ukraine has decreased (CIEP, 2013). This means that the Ukraine transit gas pipeline is feeding less gas into Europe via Romania and Bulgaria, than it used to; and this downward trend is expected to continue in the coming years mainly because of the gas hub associated with Nord Stream and the tense situation in Ukraine. A CIEP report (CIEP, 2013) on the issue argues that the Ukraine transit Russian gas pipeline renders vulnerable Eastern EU Member States such as Romania and Bulgaria which import 25% and respectively 100% of their gas needs via this route (Financial Times, 2014). These nations are faced with the challenge of ensuring gas security of supply because of their relative weak integration of transmission systems with the rest of Europe.
Crunching the numbers shows in fact how little the Russian gas incoming through Ukraine actually accounts to the overall EU-28 energy consumption. In 2013 the Russian gas imports transiting Ukraine represented about 15% of the total gas consumption of the EU-28 Member States, which in absolute terms represented about 80 Bcm/year (2013). Of the total volume of gas import incoming through Ukraine, only 53 Bcm/year are under security of supply ‘threat’, and of meager concern for EU-28. This volume represents a marginally 2.3% of the total energy consumption of the EU-28 (2013) and can be compensated for by the diversification of pipeline routes and the reliable storage levels put in place after the 2006 and 2009 shocks. At large, the Russian gas transiting Ukraine is a sensitive issue when there are no alternatives to address this supply, but alternatives could be set-up through joint efforts. Rough estimates argue that EU-28 can survive without Russian gas cca 300 days/year (2013), an estimate which has improved greatly since the first gas shock in 2006.
When factoring in the recent developments of the EU-28 energetic infrastructure one might argue that Europe is an energy shocks free region. With EU 2030 Climate and Energy Framework ambitions ahead, the European nations are making progressive steps towards achieving the 40% CO2 reductions (1990 base year). The means to achieve this is through peak shaving and switching to less carbon intensive fuels; the combination of both is LNG in NGCC. The existing 28 units (2012, incl. under construction units) are expected to be enforced by the additional 32 projected units. This impels for a Europe wide effort to unify the gas network for an increased energy security in the region.
In conclusion, the EU-28 has reasons to be concerned about the security of gas supply of its Eastern Member states in the context of the Ukrainian crisis but the bigger picture shows a unified strong European energetic market, which could easily tackle gas shortages via the storage capacities available and the diversified pipeline routes. As pointed out above, the dependence on the Russian gas transiting Ukraine, is marginal in absolute terms and the diversification of pipeline pursued in the last decade (Nord Stream, Blue Stream) softened the risk of transit related supply disruptions