Mr. Abdolvand, the Ukraine crisis is far from being resolved and the peace talks in Minsk have just failed. What are the implications of the Russian-Ukrainian conflict on the future of European energy security?
Security of energy supplies is on top of the European Union’s security agenda. The crises of 2006 and 2009 were already a wake-up-call for the EU. The Union’s energy security efforts have been strengthened since then, but one-dimensional dependence on Russia remains a threat – diversification of suppliers has to be at the centre of future energy security considerations.
Will a potentially stabilized Ukraine remain important for European natural gas supply?
The Ukraine has been an important natural gas transit country since the early 1970s. During the last years Gazprom transited about 94 billion cubic meters of gas annually via the Ukrainian system. However, Russia will successfully dry out this transit possibility in the coming years. Russia will remain the most important single supplier of natural gas to Europe through the pipelines circumventing Ukraine – especially Nord Stream and the new Russian-Turkish cooperation projects. The countries of the Baltics, the Visegrad Group, and South-Eastern Europe that have less integrated and connected energy networks are especially vulnerable to Russian supply policies.
For Western Europe Russia has been a reliable supplier. However, Russia’s annexation of Crimea and its support for the Ukrainian rebels question Moscow’s future role for the European markets. How big is the threat of a Russian energy weapon to Europe as a whole?
Russia regards energy as its most important instrument in projecting its political power and influence internationally. After the dissolution of the Soviet Union, Boris Yeltsin opened up the Russian energy sector to foreign investments. Putin, however, pursued the objective of correcting Yeltsin’s liberalisation reforms; he built up the state-owned energy heavyweights Gazprom and Rosneft and restricted foreign influence on the Russian hydrocarbon sectors. Today, Moscow possesses the ability to physically control gas flows to Europe. Especially Eastern Europe and the Balkan countries were affected by the supply cuts following the 2006 and 2009 Russian-Ukrainian gas price disputes. Last year, Russia curbed exports to several Eastern and Central European countries after they supplied Ukraine with gas. Here it becomes evident that Putin’s national energy policy led to a serious geopolitical leverage for Russia. This threat to energy security is not only felt in Brussels but also in Washington.
Moscow has not changed its stance during the various rounds of penalties coming from Washington and Brussels. The EU is importing about a third of its natural gas demand from Russia. Are sanctions on the Russian energy sector still thinkable?
At the moment, the sanctions already have an effect on Russia’s energy sector. Technical equipment cannot be purchased and the maintenance of Western equipment is difficult for Russia. Further, revenues suffer from the low oil price, which also influences investments in grand energy projects. Further capital market restrictions for Russian companies are discussed within the Union. In last December, the United States has passed a bill to support Ukraine and sanction Russia. This law also targets Gazprom if the company withholds significant gas supplies from NATO countries. The next step is for NATO to actively implement its energy security strategy.
What role will NATO play for European energy security? Is a concerted energy policy for Europe between EU and NATO possible?
It is in the interests of both Brussels and Washington that EU Members have reliable energy systems and resources at their disposal. It is the government’s responsibility to cooperate in energy security efforts within the supranational bodies. In 2006, Poland proposed the “Energy NATO” – a security alliance for EU and NATO Members with mutual support in cases of threats to a nation’s energy security. This is basically the principle of NATO’s Collective Defence applied to energy. Germany proposed a common energy security architecture that would include Russia as a dialogue partner – a form of “Energy OSCE”. Both concepts are generally interesting. But many parallel structures already exist, making the creation of new institutional structures unlikely. Existing European emergency and solidarity mechanisms have to be strengthened within the Union. Moreover, NATO must develop its efforts in energy security. The organization has implemented several projects in the fields of intelligence, international cooperation, and infrastructure protection. An Energy Security Section was established at Headquarters and the Energy Security Centre of Excellence was opened in Lithuania in 2012.
Lithuania has proven to be a valuable NATO partner and ally to the United States. Now it has inaugurated the first Liquefied Natural Gas (LNG) import terminal in Eastern Europe. What role will LNG play for European energy diversification? Is the United States likely to become an exporter to Europe?
The Independence LNG terminal in Lithuania will reduce the Baltic countries dependence on Russian gas. It is also expected that the Polish LNG terminal will be operational this year. With these diversification options the Baltic countries and Poland will be well positioned. There is enough LNG on the market right now. The United States will be able to export LNG in the next five years if they want to. However, for countries that do not have a free trade agreement with the United States this is difficult, as several U.S. institutions have to give their approval. U.S. Senator Lugar has promoted the idea that NATO countries should stand tight in questions of energy security. He proposed the “LNG for NATO Act” that would enable the United States to easily export LNG to partner countries.
What are the most important steps to be taken in order to strengthen European energy security in short- and medium-term?
Europe has to further integrate its gas market and further develop the capacities at cross-country interconnectors in both directions. The transmission network has to be enlarged with connections to LNG terminals and other supplier regions. The keyword is diversification. The EU is in a good geographical position to access various external energy sources. The Southern Corridor that connects the Caspian Sea Region, Iraq, and Iran to Europe has to be a priority project. As several security challenges arise with new transit routes, NATO and EU need a plan for strategic co-operation and burden sharing. Further, NATO has to appeal to Turkey to meet its membership obligations. Turkey has to demonstrate with whom it sides with – NATO or Russia.
Dr. Behrooz Abdolvand works as a lecturer for International Relations and Energy Policy at the Otto-Suhr-Institute of the Freie Universität Berlin since 1998 and is Research Director at the Berlin Centre for Caspian Region Studies (BC CARE). Since 2002, he works as consultant in the energy sector. Since 2013, he is Associate Fellow at the German Council on Foreign Relations.
He just finished a paper “Energy Security and NATO”. It will be published in March 2015.