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Europe's Growing Energy Worries

To what extent should the European Union be dependent on foreign sources of energy? That question is a matter of growing concern for EU leaders. Case in point: Natural gas.

When European Union Commission President José Manuel Barroso, EU chief foreign diplomat Javier Solana and Austrian Chancellor Wolfgang Schüssel visited Russian President Vladimir Putin at the Black Sea resort of Sochi on May 25, they were not in a holiday mood. Instead, their agenda consisted mainly of two important questions for the Russian leader: What does the future hold for the EU-Russian economic partnership, and how dependable are Russian energy deliveries to Europe?
The meeting between Putin and his European visitors reflects Europe's increasing dependence on foreign energy supplies, primarily from the Persian Gulf and Russia. Of the two regions, Russia is currently the greater source of concern. Russia is viewed by many in Europe as using its vast energy resources to position itself as a global "energy player," a type of "fossil fuels superpower."
In an analysis published in November 2000 on the subject of energy security, the EU Commission warned that by the year 2030 Europe would be importing 90 percent of the petroleum it needs, up from the current 76 percent. The same trend is predicted for natural gas, the other leading component in Europe's energy mix. This year Europe will import about 40 percent of the natural gas it consumes. Three fourths of those imports come from Russia and the rest come mainly from the Persian Gulf. With Europe's own natural gas reserves being depleted—largely in the Netherlands and the North Sea—Russia will be supplying well over half the natural gas used in Europe by 2030.
Russia's energy giant Gazprom is already the dominant energy supplier for natural gas in several new EU countries in eastern Europe. It has a market share of 100 percent in the Baltic States and in Slovakia, 99 percent in Poland and 82 percent in the Czech Republic. Gazprom's current market share of 35 percent in Germany will jump in 2010 when the new North European Gas Pipeline comes on line, supplying Germany directly from Russia via a pipeline that will be laid on the floor of the Baltic Sea.
Limited options
Europe's options for reducing its dependence on foreign energy are limited. Gas and oil account for 60 percent of the energy used in Europe. The rest of Europe's energy comes from domestic sources: Nuclear power (15 percent), coal (18 percent) and renewable energy sources (about 7 percent).
However, environmental concerns create considerable resistance to expanding the use of nuclear power and coal. In Germany, for example, all nuclear power plants currently in use are required to be phased out by 2020. Renewable sources of energy won't make up the gap caused by using less nuclear power and coal. The result? An increase in the demand for oil and natural gas, which have to be imported.
Some argue that Europe's concerns about its growing dependency on Russian natural gas are unfounded. After all, the European Union is Gazprom's main customer. About three fourths of Russian gas exports are delivered to Europe, and the rest is sold to former Soviet republics who generally pay much less than Europe does. In 2005 the EU accounted for 65 percent of Gazprom's total gross receipts, with the bill for imported gas totaling approximately 19.6 billion euros.
It's no surprise that Gazprom CEO Alexei Miller, handpicked by Vladimir Putin for his job, once remarked that "in this century there won't be any problem meeting Europe's gas requirements. Whatever amount of gas Europe needs, that's what Gazprom will deliver."
That seemed to be the sentiment when the first section of the new North European Gas Pipeline was welded together on Dec. 9, 2005, at a ceremony 250 miles northeast of Moscow with Gazprom officials and Germany's new economics minister, Michael Glos, in attendance. According to Glos, the new pipeline highlighted a "further milestone of German-Russian cooperation," important for ensuring Europe's future energy needs.
Wulf Bernotat, head of German natural gas provider E.ON, described the new pipeline as "a direct and reliable connection to Russia's huge natural gas reserves" ( Hamburger Abendblatt, Dec. 10, 2005).
It seems odd, then, that just five months later concerns about Russia's reliability had become so important. What influenced European thinking?
When the lights went out in the Ukraine
As part of the former Soviet Union, the Ukraine had been one of Gazprom's "special" customers, getting natural gas at a price well below the world market price. However, when Gazprom announced well ahead of January 2006 that a different price structure would take effect this year, the Ukraine balked at the new price. In late December 2005, Ukrainian President Viktor Yushchenko refused a last minute offer by Russian President Vladimir Putin to continue receiving cheap gas for another three months in exchange for a promise to accept Gazprom's new price starting April 1, 2006. On Jan. 1, 2006, Gazprom engineers cut off supplies of natural gas to the Ukraine.
Gazprom actually runs five gas lines into the Ukraine. Two lines are for the Ukraine, and the other three are transit lines into Europe to supply some of Gazprom's European customers. About 80 percent of Gazprom's natural gas for Europe runs through the Ukraine.
When pressure in the three transit lines started to drop, Gazprom accused the Ukraine of stealing natural gas. Ukrainian officials responded by referring to the transit fees Gazprom had agreed to pay for routing the lines through Ukrainian territory. The fees—paid in natural gas, not cash—could not be collected any other way since the Ukraine had been cut off from Gazprom gas.
When pressure in the gas lines supplying European customers began to drop—especially in Austria—EU leaders urged Russia and the Ukraine to resolve their dispute. Four days later Russia and the Ukraine settled their dispute with a new five-year agreement, and Gazprom turned on the gas again. The mid-winter gas dispute had European analysts and commentators warning about a new "cold war" of a different sort, since much of the natural gas exported to Europe is used for heating.
In the aftermath of the Ukrainian gas crisis, European leaders wondered how reliable Gazprom really is as a supplier. Gazprom's tactics toward the Ukraine were a reminder of what happened when Lithuania became the first of the former Soviet republics to declare its independence from Moscow in 1990. Moscow reacted by simply cutting off oil and gas deliveries to Lithuania. Those facts belied reassurances that gas supplies to Western Europe were never interrupted for political reasons during the Cold War.
EU disunited energy policy
Europe's dependence on imported energy is aggravated by the lack of a joint energy policy for the European Union, which is all the more remarkable since the EU is the world's largest importer of energy. Like other critical areas, including taxation and economic policy, energy policy is still determined at the national level. The result is that Europe has no common approach to dealing with Gazprom. Each individual EU member negotiates its own contracts with the Russian energy giant, and Gazprom has been more than willing to utilize a "divide and conquer" strategy.
The lack of a unified European energy policy also results in contradictory approaches among EU members. While Germany is scheduled to phase out all nuclear power generation by 2020, a large portion of France's electricity is produced by atomic energy. Some of France's excess capacity is occasionally sold to German utility companies—a common practice in Europe. So even though nuclear power will soon no longer be used to generate electricity in Germany, some Germans may still be using electricity generated by nuclear plants in neighboring France.
The lack of a joint energy policy has also delayed any attempt to look for other countries as possible sources for imported energy, which would lessen Europe's heavy reliance on just two regions as suppliers.
For far too long European countries simply relied on free market forces to determine energy pricing. With China's and India's needs for imported energy growing at a fast pace, it will be difficult—if not impossible—for Europe to dislodge itself from its dependence on its current suppliers. With an ever-larger energy crunch looming on Europe's horizon, look for energy policy within the European Union eventually to be decided on a supranational level.
Don't be surprised if Europe's energy crisis begins to affect its foreign policy decisions, especially vis-à-vis the two regions that supply the bulk of European energy imports: Russia and the Persian Gulf. The end-time "king of the North" spoken of in Daniel 11 apparently will be the final ruler of an end-time, European-centered superpower, the same one called "the beast" in Revelation 17.
The final resurrection of the Roman Empire can be seen today in embryonic form in the European Union. This is not to say that all current EU nations will be part of the final configuration, but those that choose to participate will combine to form a powerful military force. Daniel 11:40-43 shows that the end-time king of the North will move against the Middle East.
Other prophecies indicate that religion may be part of the reason for Europe's interest in the Middle East. However, history shows that economic reasons can be a major cause for warfare (James 4:1-2), and Europe's economy depends on oil imports from the Persian Gulf.
Once the king of the North has occupied a considerable portion of the Middle East, news from an area northeast of the Holy Land (verse 44) will be the catalyst for further military action. Is there an important economic factor for Europe northeast of Jerusalem? Yes—the vast natural gas deposits of Russia, located largely in Siberia. WNP

United Church of God El Paso

Tuesday, February 11, 2014