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 CutThe 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....MORE
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....