The EU is well aware that any dependence on Russian energy sources and transit pipelines is a strategic liability. Russia already holds a great deal of leverage over the Ukraine and Western Europe as a result of their need for Russian natural gas. In 2005 the European OECD countries in aggregate produced 11,168 bcf of natural gas and imported 13,897 bcf. Gross consumption was 19,371 bcf. Russia supplied Europe with about 4943.4 bcf of natural gas in 2004, which is about 25% of OECD Europe's gross natural gas consumption. Moreover, this dependence is projected to increase in the years to come. Natural gas production from local European sources is beginning to wane, and Europe's alternative to importing Russian gas via pipeline is presently limited to LNG imports via tanker. Indigenous European natural gas production for calendar year 2005 was about three percent less than it was in 2004, with the greatest dropoff being in the UK portion of the North Sea fields- nearly an eight percent reduction from 2004 production levels.
The long term security of European LNG imports is somewhat questionable as well. In 2004 Europe imported 747 bcf of LNG from Algeria, 40.72 bcf from Libya, 438.68 bcf from Nigeria, 138.08 bcf from Qatar and lesser amounts from Oman and Malaysia for a total of 1423.48 bcf of imported LNG. It is questionable whether Algeria can substantially increase its LNG export volume. Nigeria's exports are also in question given the growing civil unrest there. Libyan production is expected to increase slightly in the years to come. Qatar's production is expected to increase significantly, but most of the increased production will be consumed by the United States, which is projected to be importing a growing proportion of its natural gas consumption as LNG in the years to come. The EIA estimates that U.S. LNG imports (which were less than 300 bcf in 2004) will reach 2000 bcf by 2010 and possibly as much as 7000 bcf by 2030. This will radically change the demand picture for the global trade in LNG. In addition, Qatar has recently suspended further development of its North Field, for unstated reasons that might have something to do with questions about the quality of the underlying gas-bearing formation.
Russia has by far the largest natural gas reserves in the world, followed by Iran and then Qatar. Europe is under political pressure form the United States to avoid purchasing Iranian gas. In addition, Iranian gas production is largely spoken for by Iranian domestic consumption as well as a planned export pipeline to Pakistan and India.
As this article states, the EU is now exploring the possibility of purchasing gas from Central Asia, specifically Kazakhstan, Uzbekistan and Turkmenistan. However, China probably has the inside track on Kazakh oil and gas production, and Uzbekistan currently has poor relations with the West. The most interesting situation is in Turkmenistan. The country has a long term supply contract with Russia's Gazprom. The article states that the EU is trying to make inroads with Turkmenistan. If it succeeds, the Gazprom agreement would have to be canceled or breached. Russia would surely take a dim view of any such development, so the situation there bears close watching.
In the end, I would expect that the EU will be forced to accept its energy dependence on Russia, with all the political implications that would come with such an accomodation. Russian influence over the Ukraine will no doubt also increase, and Russia's economic strength will continue to grow as it regains its superpower status.
It is particularly impressive how he has been able to do this without detracting from the precision with which the essence of the individual studies is communicated to the reader.
Posted by: Timberland Boots Sale | January 03, 2012 at 10:57 PM