The Financial times has a big article today on European worries about dependence on Russian gas
The French and British governments are particularly worried that Moscow’s rising prominence as an energy supplier, not just to Germany but to Europe, is turning into an economic and political hazard for the entire continent.
"North Sea oil is running out, France has shut its coalmines, and Europe will soon be completely dependent on the rest of the world and Russian gas in particular," says one senior French government official. "We must be extremely vigilant on this issue."
Although some analysts dismiss French worries of dependence on Russia as a means of reinforcing the legitimacy of France’s vast nuclear energy programme, many also agree that Germany’s position vis-à-vis Russia is too weak.
Germany already imports 35 per cent of its oil and 40 per cent of its gas from Russia, more than any western European country. As fossil fuel reserves dry out in Europe, experts expect its dependence on Russian imports to reach 60 to 70 per cent by 2020
As I wrote in an open thread last month (and included in a larger Kos post about Russia), natural gas is a co-dependency relationship: Russian gas is deliverd only by pipeline to Europe and big pipelines mean that the supplier (Russia) has one client (Europe), and the client has one supplier; so they are stuck with one another and cannot do anything that would jeopardise that fundamental fact. And just as surely as Europe depends heavily on Russian gas, Russia depends heavily on gas revenues. Sure, there’s a lot of theater, jockeying around, politicking, but essentially, it’s a draw. Relations between Russia and Europe will be tumultuous, and probably poor or tense a lot of the time but they cannot be allowed to go bad.
The more interesting situation is on the Northern American continent, where there is no perception of a natural gas crisis as of yet although a crisis could come a lot sooner than expected.
BG, the British natural gas group, which has a strong presence in the US LNG market (natural gas liquefied so as to be transported by boat) says publicly that there will be a shortage of gas in the next 10 years:
As this graph shows, BG’s optimistic projections for LNG are barely sufficient to cover the gap between gas supply and demand in the most conservative case (counting domestic US production as well as Canadian exports).
This means that natural gas prices (which have alredy gone from 2$/MBTU to 5$/MBTU in the past few years) are going to keep on rising; this in turn will have an impact on elctricity costs (gas makes up 20+% of US electricity production) and is likely to generate more funny diplomacy with potential LNG suppliers (that includes Equatorial Guinea, Angola, Nigeria as well as Russia, Indonesia or Qatar, and possibly Iran) and local controvery as more harbors for LNG tankers and LNG regazification plants need to be built on US coasts…