Monday 9 January 2012

In sight: Energy independence for the European Union

Russia and Gazprom are fast loosing their grip on the European energy market. The Russians thought they would be able to dictate price and deliveries to a Europe more and more dependent on Gazprom gas. But the American-led shale gas revolution and LNG have - fortunately - destroyed Putin´s dream:

“Russia now faces real competition from L.N.G. and from shale gas, which the Europeans have access to,” Mr. Freedman said, referring to liquefied natural gas. “It should be worried.”
Europe imports a third of its gas from Russia and accounts for 65 percent of Gazprom’s total exports. But the big energy companies that have signed long-term gas contracts with Russia are winning more flexible pricing arrangements.
Some German companies argue that it is now a buyer’s market. This is because increasingly, the price of natural gas is no longer fixed to the cost of a barrel of oil, as it was in the past.
There is competition from liquefied natural gas, which is transported by ship, and shale, an unconventional natural gas extracted from sedimentary rocks that already makes up 14 percent of the U.S. natural gas supply, according to the U.S. Energy Information Administration. The availability of liquefied natural gas and the discovery of shale resources in Europe have rattled Gazprom’s position, especially in Eastern Europe.
Poland, which imports two-thirds of its gas from Russia, plans to reduce its dependence on Moscow by extracting shale and buying liquefied natural gas. Waldemar Pawlak, the deputy prime minister and energy minister, said that having access to alternative supplies gave Warsaw leverage in negotiations. “We can either buy cheaper conventional gas or move quicker on shale gas extraction,” he said.

Read the entire article here

This positive development (from a European point of view) is happening solely as a result of innovations in the energy industry - not by any way through some European Union energy policy. On the contrary, if anything, there is a clear danger that the EU could seriously damage its future energy independence by continuing to cling to the choices preferred by the greenies and Gazprom.

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