09 July, 2014

The Ukraine Crisis and European Natural Gas Supplies

 

The U.S. Energy Information Administration reports that Europe consumed 18.7 trillion cubic feet (Tcf) of natural gas in 2013; Russia supplied 30% (5.7 Tcf) of this volume, and 16% (3.0 Tcf) of the total natural gas consumed in Europe passed through Ukraine’s pipeline network; Slovakia gets 80 percent of its gas, and Bulgaria gets 90 percent of its gas from Russia via pipeline through Ukraine.

The U.S. Energy Information Administration reports that:

  • Europe, including all EU members plus Turkey, Norway, Switzerland, and the non-EU Balkan states, consumed 18.7 trillion cubic feet (Tcf) of natural gas in 2013. For comparison, the U.S. consumed 26 Tcf in 2013.
  • Russia supplied 30% (5.7 Tcf) of this volume, and 16% (3.0 Tcf) of the total natural gas consumed in Europe passed through Ukraine’s pipeline network.
  • Slovakia gets 80 percent of its gas, and Bulgaria gets 90 percent of its gas from Russia via pipeline through Ukraine.

In mid-June, Russia stopped supplying gas to Ukraine as part of a pricing and payment dispute. The Russian government claims that volumes of gas for transshipment past Ukraine will continue. However, based on the experiences of the 2009 cutoff of gas to Ukraine that stopped gas flows to other countries, Europe is planning for a potential crisis. But, gas flow is more diverse now than in 2009, and Russia says that it plans to continue supplying the Nordstream pipeline, which sends its gas straight to Germany via the Baltic Sea. This pipeline started operation in 2011.

In response to the crisis in Ukraine, the EU issued a communication on energy security on May 28. The plan looks at potential disruptions in the winter of 2014-2015, as well as longer-term actions such as increasing EU energy production, moderating demand and diversifying supplies. In the short term, much of the plan focuses on member states in Eastern Europe and the Baltic that do not have a diversified or interconnected grid for electricity or natural gas. Short-term efforts to deal with potential interruptions to natural gas delivery proposed include increasing gas stocks, developing emergency infrastructures and reverse flows and reducing energy demand or switching to alternative fuels in the very short term.

The communication lists EU proposed mid- to long-term actions as:

  • Increasing energy efficiency and reaching EU 2030 climate goals
  • Increasing EU energy production and diversifying supplier countries and routes
  • Completing missing energy infrastructure links between member states
  • Strengthening emergency mechanisms, such as coordinating between member states for elements such as storage and reverse flow