The headlines and the deluge of information on President Obama's meetings in Moscow must not make us forget that, in the energy sector, the EU faces its own specific problems with Russia and the other former USSR countries, and that its has to resolve them itself. Some of the information published over the last few days in our bulletin are worthy of a few words of comment.
1. Nabucco is making progress, but … The intergovernmental agreement on the Nabucco gas pipeline will be signed in Ankara on Monday of next week and Mr Barroso has officially welcomed this announcement on behalf of the European Commission (see EUROPE 9936). The adjective intergovernmental has a dual significance: it shows that this is not an agreement between companies, but that the signatory governments are directly involved; at the same time, it shows that the EU, as an entity, is not involved. It is making a contribution to the funding, the Commission has always given the project its support, its officials have helped overcome the final political hurdle (relating to the Turkish demand to be able to take some of the gas passing through Turkey, at a preferential rate), but the signatories are six governments: Turkey, obviously, and five EU countries (Austria, Bulgaria, Germany, Hungary and Romania). France wanted to be among the group of signatories, but Turkey put down its veto after the French Senate defined the events in Armenia last century as genocide. Italy is working with Russia on the South Stream project, a competitor to Nabucco because the gas that will be transported comes mainly from the same area, and the head of ENI has said that Nabucco will never come to pass. What an atmosphere. Experts point out that, to be viable, Nabucco will need the gas from Azerbaijan (and Gazprom has managed to get first refusal on this gas, with a view to transporting it to Europe through South Stream) and Iran.
Security of supply is so important to Europe that is reasonable to hope that Nabucco will, indeed, be built, that Azerbaijan will contribute to its supply and that relations with Iran will take a turn for the better. Everything would be so much easier, however, if the EU had a common energy policy, managed under the Community method! The Lisbon Treaty will make this possible. In the meantime, the move to EU funding for energy projects of common interest (€4 billion for 47 projects over two years, see yesterday's newsletter) is encouraging.
2. Russia needs the EU. Euro-Russian cooperation, which is essential for the EU, is even more so for Russia. Gazprom has taken a big hit from the fall in world demand for gas which has seen its exports tumble (when supply was expanding), and the company has already taken or given consideration to various measures which, in practice, will slow production in a number of massive gas fields. Will the export peak reached in 2008 be restored by 2012? This is by no means sure, not just because of the recession, but also as a result of European efforts to diversify its sources and improve energy efficiency. What came out of the meeting between Russia, India, China and Brazil on 16 June is that solidarity among the four is a matter of form only, that monetary cooperation remains, for the moment, theoretical (Russian attempts to persuade the others to partly replace the dollar and the euro with the rouble met with no success) and that the demand for Russian gas in China can be disregarded because of the price (the Chinese, it would appear, offered four times less than the price paid by the Europeans) and the lack of infrastructure. Europe, then, is irreplaceable.
3. Georgia comes on the scene. Georgian President Mikhail Saakashvili has decided to use energy as the way of bringing Georgia to the forefront of Europe's consciousness. He has said that his country is the alternative to the Russian monopoly. Gas from Central Asia and the Caspian Sea region could be transported to Europe through Georgia. He added: “As soon as it becomes clear that there will be no more wars, investors will start coming”.
4. The Arctic problem is beginning to show. All the countries bordering on the Arctic are considering the possibility of extracting hydrocarbons at some point in the future: Canada, the United States, France (through St Pierre & Miquelon), Russia, Norway, Greenland, Iceland. The EU is directly involved through France and Denmark (Greenland), and through the prospect of Iceland's joining the EU.
Furthermore, the Ukraine issue has not yet been fully resolved, but the latest information (see yesterday's newsletter) is encouraging. This is further proof that difficulties can be overcome if there is the political will. The EU is effective every time it manages to speak with a single voice - something the governments of member states should never forget.
(F.R./transl.rt)