Title: Russia’s gas pipeline strategy and Europe’s alternatives – European Council on Foreign Relations
Headings: Russia’s gas pipeline strategy and Europe’s alternatives
Russia’s gas pipeline strategy and Europe’s alternatives
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Content: To ensure this normalisation, however, Europe should keep engaging with Ukraine and Turkey – the two most important transit countries for European gas markets – to make sure that energy market liberalisation processes there do not stall due to domestic political dynamics and short-term energy populism. Europe without Russian gas through Ukraine (ca. 70 billion cubic metres per year) is tantamount to Northeast Asia without Japan’s entire nuclear power fleet
So, what will happen to European gas markets, should Moscow stop using Ukrainian pipelines after 2019? First, Europe might be left without Russian gas going through Ukraine by the early 2020s. The implications of this scenario may be rather dramatic for Europe, had we not lived through a period of rising energy demand, and by implication prices, post-Fukushima. Europe without Russian gas through Ukraine (ca. 70 billion cubic metres per year) is tantamount to Northeast Asia without Japan’s entire nuclear power fleet. However, such a shock might not impact European prices in the same way as it did in Northeast Asia because we are entering a ‘buyers’ market’. Indeed, the demand in Asia is lower than anticipated and developments in liquefied natural gas (LNG) capacities globally favour gas consumers. But, the recent slump in oil prices means that some of the LNG production capacities may never materialise, while the low price environment would also encourage more gas demand.