GAS AND POWER: EU remains wary of Russian gas despite Gazprom's assurances

• Published date: 01 October 2016
• Date: 01 October 2016
• DOI: http://doi.org/10.1111/oet.12429

GAS AND POWER

EU remains wary of Russian gas despite Gazprom’s assurances

A new argument between Russia and Belarus about the

price of gas is reigniting fears in the European Union

(EU) of an interruption to supplies further westwards.

Russia uses the gas transmission system of Belarus

to export some 4bn cfd of gas to countries further

west. Moscow and Minsk are engaged in a protracte d

disputeoverthepriceBelarusisexpectedtopayfor

its gas.

Some EU politicians claim that this dispute threatens

the transit of these 4 bn cfd. Germany’s InteriorMinistry

has gone so far as asking Germ ans to stockpile food and

other items as a general precaution against emergencies:

one of which could be an interruption to gas supplies[1].

Price dispute

Russia and Belarus disagree over the price charged by

Russia for its gas. Belarus says the current Russian

wholesale price is 80% more than it should be, given

presentmarketconditions.Russiameanwhileclaimsthat

Belarushasfailedtopayforgasalreadydeliveredand

owes it between $200 and $300 mn.

At present, Russia’s partly state-owned gas exporter,

Gazprom, is indicating that it is willing to go on supply-

ing Belarus while, at the same time, reassuring countries

further west of its commitment to “the stable transit” of

Russian gas via Belarus. Many in the EU remain uncon-

vinced,however,andpointtotheinterruptionsthat

occurred to Russian exports to the EU via Ukraine in

2006 and 2009, which were also the result of disputes

over prices charged by Russia for its gas. For its part,

Russia blames Ukraine for the interruptions to Western

supplies, saying that the Ukrainians appropriated some

of these for their ow n use.

Belarus now says that it wants to reduce its reliance

on Russian gas and has begun work on the country’s rst

nuclear power station. e European Commission has

made similar nois es about reducing the EU’s dependenc e

on Russia.

New pipeline links

Despite all this , Gazprom continues to work on plans for

new pipeline links to the EU.Two new schemes are under

consideration at present: one under the Baltic Sea and

another via Turkey. In each case, the aim is to provide a

routethatdoesnotinvolvethetransitofeitherBelarus

or Ukraine.

e Nord Stream 2 project is for a 5.3bn cfd pipeline

running parallel to an existing 5.3bn cfd line from Rus-

sia, under the Baltic, to Germany. eplan has the back-

ing of several Western European gas rms but faces

opposition from countries further east, notably Poland.

e US government has also indicated its hostility to

any project that might help Russia to sell more gas to

Europe.

Another proposal, called Turk Stream, is for a line to

run under the Black Sea to Turkey and then to Italy via

Greece. e recent thaw in diplomatic relations between

Moscow and Ankara means that the pipeline might be

in operation by 2019 or 2020. Deteriorating relations

between Turkey and the EU, on the other hand, mean

that Brusselsmay try to stop or delay sucha line. Already

some EU ocials have privately expressed fears of a

future terrorist attack on t he pipeline where it crosses

Tur ke y.

Reference

1. Frankfurter Allgemeine. So will die Bundesregierung

im Kriegsfall reagieren; www.faz.net/aktuell/politik/

inland/f-a-s-exklusiv-so-will-die-bundesregierung-

im-kriegsfall-reagieren-14398973.html.

© 2016 John Wiley& Sons Ltd