From the blog of F. William Engdahl:
Europe’s energy geopolitics and the security of EU energy supplies
is getting very dicey as in contentious. The latest developments
revolve around who will be the major suppliers of natural gas to the EU
markets going forward. The major actors in the growing fight for market
in what is one of the world’s largest natural gas markets, the EU,
include Russia, Norway, Azerbaijan, Qatar and most recently the USA with
shale gas in LNG tankers. Into this mix Holland, since the 1960’s a
major supplier of EU gas, has just decided to severely limit production
from its largest gas field
. .
On January 27 during a mischievous meeting with Polish Prime
Minister Morawiecki in Warsaw, Rex Tillerson, US Secretary of State and
former CEO of ExxonMobil, declared openly, “Like Poland, the United
States opposes the Nord Stream 2 pipeline. We see it as undermining
Europe’s overall energy security and stability.”
This refers to the second undersea gas pipeline being built across the
Baltic Sea by Russia’s Gazprom to double the existing gas capacity now
flowing from Nord Stream I to northern Germany. Nord Stream II will
deliver 55 billion cubic meters Russian gas via Germany at capacity.
Polish Prime Minister Mateusz Morawiecki in a press interview said
he urged Tillerson to convince the US President to impose sanctions on
the completion of Russia’s Nord Stream II pipeline. Morawiecki stated,
“we talked about Nord Stream 2. We want the construction of the Nord
Stream 2 pipeline to fall under the U.S. sanctions bill …which includes,
among others, sanctions against Russia.”
The two Nord Stream pipelines are deliberately intended to avoid
disruption of Russian gas flows through the politically unstable and
Russo-phobic Ukraine. In June, 2017 as the US President made a dramatic
appearance in Warsaw to promote EU imports of US LNG from shale gas,
Poland took delivery of the first tanker of US LNG, as Trump told the
Poles they should rely on the far more costly US LNG. The US is pushing
Poland and other states to ask that Brussels, where the climate is
strongly against Russia, to take over negotiations with Gazprom. Germany
refuses, at least until now, insisting it is an internal German
commercial affair. Last November the Polish state gas company PGNiG
signed a mid-term deal with Centrica LNG Co. an Anglo-American energy
group, to receive nine LNG shipments in 2018-2022 from the United
States, as part of their plan to cut dependence on Russian supplies.
Poland gets most of its natural gas today from Russia, but when
their contract with Gazprom expires in 2022, they plan to turn to
imports of LNG from Qatar and the US, as well as gas from Norway. To
block Germany’s Nord Stream II in the process is a high-risk venture,
further adding to tensions between Poland and Germany as well as
economici insecurity across the EU.
Largest EU Gas Field Must Cut
The Polish call for US sanctions to block Nord Stream II comes at an
inopportune time to put it mildly. On February 2 the Dutch gas
regulator, the State Supervision of Mines, said gas production from
Holland’s giant Groningen field should be cut to half the present
production, to a maximum of 12 Bcm/year as soon as possible to further
minimize the risk of earthquakes. Recent quakes have caused major damage
to homes there. That is a mere 25% of production as recently as 2014.
The government is advising that the field will no longer be able to
deliver gas within four years.
Groningen is one of the world’s largest natural gas fields, in
production since the 1960’s. It is operated jointly by Shell and
Tillerson’s former company, ExxonMobil, so the US Secretary of State is
well aware of the reality. The sharp cut in output now exposes the gas
dilemma of the EU.
A constant barrage of NATO and EU Commission propaganda has attacked
EU reliance on Russian gas imports, while German and other EU industry
groups strongly back Nord Stream as a stable and low-cost alternative to
costly US LNG or other gas imports. According to the official EU
Eurostat, Russia’s share of EU-28 imports of natural gas declined from
34.6 % to 26.8 % between 2005 and 2010.Today it is around 29% of total
imports. NATO member Norway is the second largest supplier, with some
26%. Algeria and Qatar are other supply sources.
Alternative EU Gas Supplies?
Serious, stable and economical alternatives to Russian gas for the
28 member states of the EU are limited. The import of US shale gas LNG,
even were the infrastructure in form of landing facilities and
regasification facilities in place, is far more costly, given the cost
of special LNG tanker transport, than Russian gas via pipeline.
Estimates are that Poland had to pay a premium of 50% more for delivery
of US LNG last June compared with Russian gas. The Russian gas which
Poland presently receives via Soviet-era gas pipelines transiting
Ukraine are precarious. The Ukraine Energy Minister Igor Nasalik
admitted last summer the country will soon be unable to ensure Russian
gas transit to Europe because of the deteriorating state of its gas transportation system.
Indicative of the economic chaos there Nasalik accused Naftogaz,
Ukraine’s state oil and gas company, of refusing to invest in the
country’s gas transportation system. In any case the existing
Gazprom-Naftogaz contract expires December, 2019 and Russia has
announced it will not renew. By then the EU energy situation will have
to look different or the EU faces a supply crisis.
Aside from the limited prospect for US shale gas via LNG tanker to
fill the EU gas import demand in place of Russian gas, other options
being looked at in Brussels are even more risky....
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