By Vestnik Kavkaza
The EU and Russia are tightly connected economically, including in the sphere of gas supplies – Russia is the main exporter for Europe, while the EU is the main consumer of Russian gas. Pavel Zavalny, President of the Russian Gas Society, Deputy Chairman of the State Duma Committee on Energy, speaks about cooperation between Russia and Europe in the gas sphere. He stressed that Europe remains a basic partner of the Russian Federation.
According to him, Russia exports “about 30% of the gas produced in Russia, about 40% of the coal, and more than 50% of the oil. Together with oil products, our exports to Europe are more than 80% and only 12% to the Asian-Pacific region.”
As for European energy consumption and energy balance in the gas sphere, Zavalny noted that last year gas consumption was about 462 billion cubic meters, it is less than last year. In 2012 it was about 480 billion: “The reason for the reduction is the use of renewable power sources. The share of renewable power sources in production of electric power in Europe has increased by 22%. It is even more than they have planned. Initially the EU planned 20%. They achieved the goal ahead of schedule. Moreover, they increased use of coal from America, which is cheaper to import than importing Russian gas. At the same time, Russian gas amounts to 46% of European gas imports, according to 2013 data. In general, gas consumption is more than 30%. Speaking about the current situation, imported gas amounts to 25% in the European energy balance. This is great when gas is a bit more than 25%, coal – 25%, then oil, oil products, and renewable power sources. This is a perfect energy basket for the EU.”
Zavalny emphasizes that the gas issue is very politicized: “Why? Speaking about coal, it could be bought in America or Russia or other countries; the same situation applies to oil, its market is highly developed. But unlike oil and oil products, they have no alternative for gas imports. Europe understands that it cannot do without Russian gas, even though it wants to be independent from us. 10 years of talks about reduction of energy dependence from Russia led to the fact that we achieved a record level of gas exports – last year 162 billion cubic meters to Europe. Speaking about prospects, you know that Europe reduced its own production. Today it produces about 260 billion and provides only 50% of its own consumption. On average the dynamic of reduction is about 4 billion cubic meters a year. By 2035-2040 Europe will produce no more than 180-190 cubic meters annually. At the same time, demand will grow. It is forecast that annually demand will grow by 0.5%. In 2040 gas consumption in Europe will reach 580-600 cubic meters. Considering the growth of demand and reduction of production, by 2035-2040 the gas deficit will be 180-200 billion cubic meters in comparison with the current situation.
According to Zavalny, the question is whether Europe will take gas: shale gas from America will be expensive. As for Azerbaijani gas, Shakh-Deniz-2 will provide only 10 billion, and the pipeline will pass through Turkey, which is developing, and I think the gas won’t even reach Europe. Iranian gas is too risky. In Libya production is low. In Egypt internal demand is growing, while production is falling. “There are only two reliable exporters – Norway and Russia. LNG is directed to the Asian-Pacific region. Last year the volume of LNG supplies to Europe halved, as initially LNG prices for the APR were 150% higher than prices in Europe. Now they are 35% higher. Obviously, LNG can be transported on land and it is sent to more profitable markets,” Zavalny says.
The expert admits Russia’s dependence on gas export to Europe: “Our exports bring 70% of our revenues to us, this includes oil and gas exports. And the main market for our resources is Europe. We depend on Europe, we want to deal with it. But Europe is preventing an increase of security of supplies. They didn’t let us implement the project of Yamal-Europe-2. They prevent construction of the South Stream. They don’t let us use the whole capacity of the Nord Stream, as they don’t give a license for using the pipeline. Such attempts are purely political and geopolitical.”
