Russian Riddle EU Can't Agree on a Natural Gas Strategy

European leaders agree that the Ukraine crisis has made natural gas supplies from Russia precarious. Yet they are divided over what to do about it. Poland wants a new European energy union, but others seem to be in no hurry.

A natural gas delivery station on the Slovak border with Ukraine. EU is worried about supplies this winter.

A natural gas delivery station on the Slovak border with Ukraine. EU is worried about supplies this winter.

By and

The flame last Tuesday was immense, rising some 200 meters (650 feet) into the air out of the natural gas pipeline named Brotherhood in eastern Ukraine. What caused the explosion remains a mystery. But it showed with shocking immediacy just how vulnerable Europe's energy supply has become as a result of the unrest in Ukraine.

A day before the explosion, Russian energy giant Gazprom had announced that it would only continue supplying Ukraine if the country paid for deliveries in advance. Because about half of Russian gas headed for Western Europe flows through Ukraine, European leaders now have a crucial topic to discuss at their summit this week in Brussels: Will deliveries to EU member states be affected?

At the same time, EU leaders are also wrangling over how to secure Europe's long-term natural gas supply. Polish Prime Minister Donald Tusk is determined to demand more solidarity from his European partners. Others too have taken up his proposal to create a so-called energy union to reduce Europe's dependence on Gazprom.

But as so often happens in the EU, when it comes time to discuss the details, national interests diverge and friendships dissolve, particularly when money enters the picture.

Tusk envisions the creation of a kind of purchasing syndicate that would negotiate with Russia. Poland is furious that it has to pay considerably more for natural gas than major German buyers.

But German Minister of the Economy Sigmar Gabriel is skeptical. "There are good reasons why those are decisions made by the private economy," he said earlier this month at a meeting of EU energy ministers. Thus far, German suppliers like E.on or Wintershall have gotten along well with the Russians. They have long-term gas-supply contracts of up to 20 years with Russia, guaranteeing them lower prices.

Unlawful Contracts?

According to industry insiders, these old contracts are getting in the way of EU solidarity. A high-ranking E.on manager says that many such deals explicitly prohibit customers from re-selling the natural gas abroad. That means that the European Commission's plan calling for Western European countries to deliver gas to Eastern European countries in case of emergency is not currently workable.

The EU executive is convinced that such clauses are against EU law. European Commissioner Joaquin Almunia has launched an investigation into Gazprom, partially as a result of the deals, and European Energy Commissioner Günther Oettinger is likewise skeptical. It would, he says, "be unlawful if the contracts stated that the gas can only be used in Germany."

The financing of the planned energy union has also been a source of conflict. According to Commission calculations, about €200 billion would need to be invested by 2020 in order to upgrade pipelines and power lines so that a European single energy market could be created. The EU has only made €5.8 billion available thus far.

EU member-states haven't even been able to agree on what measures must be taken before next winter. In the current version of the final summit communiqué, which is already being negotiated, there is only talk of strengthening "existing emergency and solidarity mechanisms," like natural gas storage. The Poles, on the other hand, are asking for concrete details, like who must deliver gas at what price and at which volume.

The tone is getting sharper. "It's impossible," a Polish diplomat complains, "that we can't agree on something substantial in a crisis like this one."

Translated from the German by Thomas Rogers


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ulyssesreturns 06/24/2014
1. Useless EU
So the EU can decide on a useless second-rather like Juncker but can't agree on securing essential energy supplies? Hiw pathetic is that? The UK has energy security and laughs at the rest of the EU.
Milopoulos 06/25/2014
2. Cameron's or Juncker's Europe
An EU waiting instructions from Washigton whether it will support South Stream pipeline or not, undereastimating its own resources in Aegean sea and Easst Mediterranean , invloving in disputes with Russia protecting the interest of USA but not its own ,waiting USA's military protection after the disputes be incurred and so many other affairs which keep EU to be just a puppet in World's politics.There is no future based on this scenario.Ally with USA yes , close cooperation yes, but always EU's interests first.
help.message 06/25/2014
3. Other way
To avoid this problem the EU countries have a very clear option: bypass of dangerous territory. If they are able to resist the boundless ambitions of USA and if they support the building of pipelines like "south stream", they would be OK. In other case Russia would depend on China and will - inevitably - share with China its policy.
nsmith 06/26/2014
4. optional
Don't you get it yet??? -- there's no such thing as "fair play" in this game. As long as Russia/Gazprom/Putin hold all the energy cards, nothing is for certain -- Just don't wait until winter to figure this out!
nuno tedesco 06/26/2014
5. untill when?
again and again the eurocrats and everything else shows how long Germany have set itself free from this parasyte german-milking union. this eurocrat germany-hater clown is just one more ton of water in the Ocean of offenses and trillion euro robbed money figures.
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