November 9, 2015

Emmet Tuohy, International Centre for Defence and Security: There Should Be a Continuing Role for Russian Gas in Europe’s Future Energy Mix

Tallinn, the far north of Europe, is home to the International Centre for Defence and Security, where Emmet Tuohy, a U.S. expert on Europe’s energy security, has worked since 2012. We met with Tuohy at a recent panel discussion on energy security which was part of Balkan SAYS, a youth seminar organised in Bled, Slovenia, by the Euro-Atlantic Council of Slovenia, to discuss both the importance of Europe-Russia cooperation on gas and energy (in)dependence of EU Member States, attempting to draw parallels between the Baltic states in the north and Balkan countries in the south. According to Tuohy, Turkish Stream could serve as an alternative to South Stream for the latter, although the Eastring project could be an even more effective solution, while LNG terminals are “a fantastic way of increasing security and diversity of supply in Europe”. In the following interview, Tuohy also compared the U.S. and EU energy transitions, saying that the electric car industry is likely to develop faster in the U.S.

Tallinn, the far north of Europe, is home to the International Centre for Defence and Security, where Emmet Tuohy, a U.S. expert on Europe’s energy security, has worked since 2012. We met with Tuohy at a recent panel discussion on energy security which was part of Balkan SAYS, a youth seminar organised in Bled, Slovenia, by the Euro-Atlantic Council of Slovenia, to discuss both the importance of Europe-Russia cooperation on gas and energy (in)dependence of EU Member States, attempting to draw parallels between the Baltic states in the north and Balkan countries in the south. According to Tuohy, Turkish Stream could serve as an alternative to South Stream for the latter, although the Eastring project could be an even more effective solution, while LNG terminals are “a fantastic way of increasing security and diversity of supply in Europe”. In the following interview, Tuohy also compared the U.S. and EU energy transitions, saying that the electric car industry is likely to develop faster in the U.S.

Why exactly do you see Russia as a threat to European energy security? Do you not see Gazprom for example as a reliable partner?

Russia endangers European energy security because it views energy exports as integral to its geopolitical strategy, and has used supply cutoffs—both threatened and actual—on multiple occasions to advance its foreign policy interests. While it has indeed sought to be a relatively reliable supplier to its main customers in Western Europe (notably Germany) since it began its existence as the Soviet Ministry of Gas Industry, the 40 separate cutoffs against the Baltic and CIS countries since 1991 demonstrate that when it comes to Europe as a whole, its reliability is questionable. And the problem wasn’t just confined to the former Soviet Union—interruptions in supply to Ukraine had an impact on Central European states as well. But its solution was not to work harder at reaching a mutually beneficial transit relationship with Ukraine, but ultimately instead to build an extraordinarily expensive pipeline (Nord Stream) to take the very same gas to the very same customers.

That said, there of course should be a continuing role for Russian gas in Europe’s future energy mix—if, that is, Gazprom can be integrated into a competitive system organized on a transparent market basis. And there have been recent signs that, thanks in large part to the very active role of the European Commission, the company is beginning to play by the rules (for example, in auctioning some of its pipeline gas at Western European hubs according to spot-market prices, or by removing restrictive take-or-pay or destination clauses in some of its contracts.) If these trends continue, Gazprom will indeed be a reliable partner for Europe.

You’re active in Tallinn, Estonia. Do you believe that Baltic countries are the most endangered EU Member States in terms of energy dependence?

As an “energy island” isolated from the markets or gas/electricity grids of the rest of the European Union, the Baltic countries certainly have been among the most vulnerable European countries in terms of energy dependence. One need only look to the gas stress tests conducted by the European Commission last year, which pointed to the Baltics, especially Estonia, as likely to face prolonged supply shortfalls in the event of a Russian cutoff, even in the most cooperative scenario.

But things have been changing rapidly. Since last year, a second electricity cable has connected Estonia to Finland, and prices in the two countries have converged within the Nord Pool Spot market. Even if the region still remains vulnerable to frequency or other disruptions due to the synchronization of its grid to those of Russia and Belarus, other projects are underway as well—such as the NordBalt cable linking Sweden and Lithuania. So the energy island is more of an “energy peninsula” at this point! Moreover, since the stress tests last year, an LNG terminal has opened in Lithuania, supplying Estonia with gas as well, and a final agreement on a gas pipeline linking Lithuania to Poland (and thus to the rest of Europe) has been reached. Although political will is needed to see through these projects to their completion, it seems that a true end to the energy isolation of the Baltics is just around the corner.
Continue reading: Energetika.net

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