Again and again: Russia strops gas delivery to Europe as there are unsolved gas transit conflicts, this time again with Belarus. Russia strongly depends on the earnings of selling fossil fuels, especially to Europe. Most important transit routes are through the Ukraine and Belarus. As Belarus did not pay the open bills to Russia, Russia reduced gas delivery amounts to Europe. What does this mean for Europe, for Germany? Here some questions and answers.
Many European countries proclaimed to bring down energy dependence from Russia when Russian-Ukraine gas crisis had began in January 2009. What has already been done on this proposals, what projects is realising now and when will it work?
Nothing has been done since then to reduce gas demand. Europe’s gas demand will increase, and Europe wants to diversity transit routes, as with the new pipeline North Stream, South Stream or Nabucco pipeline. Also important is the option to ship liquefied natural gas to Europe, and this means new LNG terminal. But the alternatives to Russia are limited. The Kaspian region can deliver some shares, Katar and Africa are important. Iran is politically to instable to become a reliable trade partner. The gas market is more relaxed since in the USA the gas supply has been substantially increased. This however brings the gas price down, and Gazproms and Russias revenues decline.As the financial crisis also reduced the revenues for the company and the country, Gazprom is under pressure to get as many revenues as possible. Russia is too dependent on earning of selling fossil fuels.
What does the current gas crisis mean for Gazprom’s and Russia’s reputation? Who is on blame in the gas crisis? Who was on blame in gas crisis -2009?
The reputation is becoming more and more negative as Europeans have the impression that Russia and Gasprom are no reliable trade partner anymore. Gazprom though would like to advertise alternative pipeline routes which to not pass and transit countries like the North Stream pipeline.
What are German officials doing concerning the dispute? Whom they are negotiating to?
Germany is interested to get no negative impact out of the crisis. As Germany has also a high share of gas storage, Germany might help other countries if the crisis will take longer.
What would be your forecast on gas crisis for tomorrow and near-term outlook? What did disputers say to you on the issue?
Very difficult to say. If there will be no agreement soon, the crisis might take longer. Europe though will ask for an agreement very soon.
According to the chief of Europarlament Eji Busek, Eastern Germany as Lituania have been affected by Belarus decision to cut gas transit.
Indeed, Lithuania is affected most, as it gets 100 % of gas from Russia. Latvia might help in a short run. Should the crisis take longer, we need more sustainable solutions.
Could you describe damages in detail?
Gas is used for electricity production, heating, cooling and transportation. so all sectors are affected if no gas is available. In Germany we have large gas storage options, so the impacts might be low. In summer the gas demand is much lower than in winter, so that the damages are much less severe as in winter.
When Germany would get gas — from what sources — if gas transit has been cut? Would it be enough to cover 100% Belarus gas suppliing and for what term?
Germany gets only 20 % of total Russian gas imports via the Belarus pipeline. Alternative pipeline routes can be used, as via Ukraine. In addition, gas demand is low and high storage capacities exist.
What would you advice to affected customers? What steps will you do afterwards?
We should become less dependent on one supplier, diversify imports and reduce demand for fossil fuel in general. Gas however is a good substitute for oil for housing energy and transportation. We need though more flexible transport options as via liquefied natural gas (LNG). LNG can be shipped and is therefore more flexible than pipeline routes.