Why is gas an issue in the Ukraine crisis?
Gas is not just a source of energy, sometimes it is a political weapon. As western countries weigh possible sanctions against Russia for an invasion of Ukraine, the future of the Nord Stream 2 pipeline hangs in the balance. But it’s complicated. The EU gets 41% of its gas from Russia; Russia earns 60% of its import revenues from the bloc. The crisis over Ukraine comes as Europe is struggling to deal with soaring gas prices and internal divisions over how to wean itself off fossil fuels in response to the climate emergency.
What is Nord Stream 2?
Nord Stream 2 is a 750-miles pipeline connecting Russia and Germany, with the potential to supply 26m German homes. The pipeline has been completed but has not yet certified by Germany’s energy regulator.
It’s much more than another engineering project. The Baltic Sea pipeline bypasses Ukraine and is seen as depriving Kyiv of lucrative transit fees. One former Polish foreign minister even likened it to the 1939 Molotov-Ribbentrop pact that carved up eastern Europe between Nazi Germany and Soviet Russia.
What happens to Nord Stream 2 if Russia invades Ukraine?
The US has insisted the pipeline will not move forward if Russia invades Ukraine. Somewhat less emphatically, Germany’s foreign minister, Annalena Baerbock, has said the pipeline would be up for discussion as part of sanctions measures. The EU needs unanimity among 27 member states to impose sanctions. While Germany’s voice would probably be decisive, stopping Nord Stream 2 would need support from other member states, such as Austria and Bulgaria, that are highly dependent on Russian gas and nervous about antagonising Moscow. They are among 10 member states in central and eastern Europe that import more than 75% of their gas from their eastern neighbour. EU officials fear any move against Nord Stream 2 would trigger retaliation from Moscow.
Will Russia turn off the pipes?
That’s impossible to answer without seeing inside the mind of Vladimir Putin, who likes to keep the world guessing. But the Kremlin has shown previously it is ready to use gas as a weapon, during the supply crises of 2006 and 2009, which had a severe impact on central and eastern Europe.
Russia is heavily dependent on fossil fuel revenues, but has made efforts to increase supplies to China, a big and powerful customer, over the last 15 years. Last week Moscow agreed a 30-year contract to supply China with gas and build a new pipeline. But the EU remains a lucrative customer, for now.
Can the EU cope without Russian gas?
Gazprom already stands accused of market manipulation in Europe in an effort to pressure European regulators to grant a swift approval to Nord Stream 2, which needs to clear regulatory hurdles. The Russian state energy company has dismissed the charges as lies.
With the support of the US, EU officials are searching the globe for alternative gas suppliers. The EU foreign policy chief, Josep Borrell, and energy commissioner Kadri Simson are holding talks on energy security with the US secretary of state, Antony Blinken, in Washington on Monday. The US is the biggest supplier of liquefied natural gas to the EU. Talks are under way on increasing LNG supplies to the EU from Norway, Qatar, Azerbaijan and Algeria.
Analysts at the Brussels thinktank Bruegel argue that the EU could get by without Russian gas supplies until the summer with increased imports, a few logistical headaches and some effort to reduce demand. In the longer term, Bruegel writes, the EU would face more painful political choices, including costly action to reduce demand, such as emergency closures of industrial plants.
Will the crisis force the EU to reduce dependence on Russian gas?
Despite successive gas disputes with Russia and the huge diplomatic fallout over the annexation of Crimea and downing of flight MH17 in 2014, the EU has done little to wean itself off Russian gas. Borrell said in a blogpost before his Washington trip that the EU had not done enough to “enhance our capacity to face potential gas supply cuts”, while Russia had been building up its foreign currency reserves, a measure to insulate itself from western sanctions.
The latest crisis could force a reckoning, as should the EU’s climate policy, which has a legally binding target of net zero emissions by 2050. The problem is many member states see gas as a bridge away from coal or nuclear power. The need for a “gas bridge” is disputed by environmentalists, but the policy choice has already been made in many European capitals. Europe’s thirst for gas, it seems, is not going to disappear anytime soon.
