Natural Gas Dependence Hobbles Western Response to Crimean Crisis

With the Crimean referendum just days away, President Obama hopes that economic sanctions will cause Russia to back-off its threatened annexation from Ukraine. However, Europe may be unlikely to go along due to it's dependence on Russian natural gas.

"Roughly one third of all Europe's natural gas arrives via pipeline from Russia, and the current standoff in the Crimea has European leaders worried about the reliability of energy supplies. Energy analyst Joe Stanislaw from Deloitte LLP tells host Steve Curwood that energy insecurity may prompt some European countries to explore domestic fossil fuel extraction," states the introduction to the Living on Earth feature, "The Crimean Conflict and Energy." [Download here.]

However, the pipeline flows two ways, figuratively speaking. "Russia needs the European gas market. Almost 90 percent of all Russian gas exports go to Europe," states Stanislaw, so economic sanctions, if Europe were to go along, could have a powerful effect.

In fact, Stanislaw sees similarities to the Arab oil embargo of 1973 being the driving force for America to achieve "energy security" in terms of producing more of its own oil - which thanks to new extraction technology, is on course to achieving. 

Could Europe apply fracking to its own natural gas shale formations to increase production as has been done in the U.S.? That possibility is discussed by NPR reporter Christopher Werth [listen here].

Many Europeans regard the U.S. boom in shale gas with trepidation. While France and Bulgaria have even banned fracking, others look at the U.S. with envy, says Julian Lee of the Centre for Global Energy Studies in London.

Energy analyst Pavel Molchanov sees a silver lining for Europe in the Crimean crisis. It "is just another reason for European countries to develop their own shale gas industries, Molchanov says." However, there are reasons why fracking works in the U.S. and might not in Europe. Take property rights, for example.

In the U.S., landowners own the rights to the minerals under their property, says Paul Stevens, an energy expert at Britain's Royal Institute of International Affairs. If Stevens owned a piece of American land and a company wants to drill, he says he'd be all ears.

"If you discover any shale gas, it's mine," Stevens says. "I get a slab of the action. In Europe, the subsoil minerals are the property of the state, not the landowner. So all the benefits and profits go to the governments."

Others see opportunities in the U.S. to loosen restrictions of natural gas exports to Europe and Ukraine. Both Sen. Mark Udall (D-Colo.) and his Republican challenger for his seat this year, Rep. Cory Gardner, have introduced bills to "amend a provision of the Natural Gas Act to allow for approval of natural gas to World Trade Organization member countries. Ukraine and surrounding countries make the cut," writes The Hill's Laura Barron-Lopez.

In a related article, she writes that "Central European countries are asking U.S. lawmakers to expedite natural gas exports in an effort to curb Russian President Vladimir Putin's power." A New York Times article discusses that possibility, indicating that the boom in U.S. natural gas production may allow for a new era of "American energy diplomacy".

Full Story: The Crimean Conflict and Energy


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