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11 June, 2014  ▪  Alla Lazareva,  Olha Vorozhbyt

No European Joy Without Ukrainian Alloy

The EU is beginning to take concrete action against its excessive dependence on Russian gas

“We can neither confirm, not deny your information” was the response that The Ukrainian Week got from the press service of the French oil company, Total. Similarly, Gaz de France did not want to speak to the press. Foreign colleagues, to whom we applied for help, did not get a clear response from Shell, E.ON, ENEL, BP.

The question was as follows: “Is it true that either directly, or through lobbying structures, your enterprise was demanding that Brussels remove the head of Gazprom, Alexey Miller, from the list of people subject to EU sanctions? Because his name was submitted on the initial list, but was not on the final one.”

Silence often gives consent. In professional journalism, this is not always the case. So let’s leave this game of hide and seek to the consciences of the leading energy enterprises of Old Europe, in which he who is not caught trusts that he is not the thief. One thing is clear: quite a few representatives of big Western business want to work with the Russian Federation: they want to invest in projects there and earn money in Russia. In pursuit of high income, they are willing to forget about Ukraine, geopolitics, fairness, moral principles and other non-economic matters.

RELATED ARTICLE: Is Gazprom on the Ropes? Ineffective business model of the Russian gas monopolist makes it a weaker promoter of the Kremlin's policies abroad

In this case, everything is predictable. But it reveals an interesting alternative trend, together with the concrete pragmatism of big money. This is the search for a common European energy interest. The Ukrainian crisis has become a kind of catalyst for the process of finally creating a kind of an “energy NATO”, which Lech Walesa had futilely called for during his presidency.

The building of an efficient and self-sufficient system of European energy mutual aid is still aeons away. But the first humble concrete steps are being made. In recent days, the European Commission has granted a tranche of EUR 750mn to finance projects for the construction of common European infrastructures in the energy sphere.

As officials from the French Ministry of the Economy explained to The Ukrainian Week, “The Ukrainian crisis has convinced even the most die-hard sceptics that it is time to build a rapid interconnector system, which will allow the transfer of gas, say, from France to the Baltic States, which are very dependent on Gazprom supplies, or from Sweden to Finland, which is also currently highly dependent on Russian gas.”

RELATED ARTICLE: The Third Gas Revolution

Günther Oettinger, European Energy Commissioner, even used the word combination “gas as a weapon”, when assessing the actions of Russia regarding Ukraine. This truth has been obvious for many years, but has only now become clear to highly-placed officials in Brussels. “You have no idea of the uproar caused, when the circumspect and cautious Oettinger spoke about the weapon,” an administrator, who works in the office at the European Commission in Brussels told The Ukrainian Week. “The Russians bombarded the Commissioner’s office with letters of indignation, and offices at all levels were inundated with phone calls... This means that Oettinger unexpectedly hit the nail on the head.”

However, several days later, the European official softened his words. He began to explain that he only spoke “figuratively” about a “weapon”; that the Polish project for the establishment of a European energy union, which he himself had praised several days earlier, still “requires considerable work by experts”. But a word spoken is past recalling. The European Commissioner was heard and a chain reaction ensued. EUR 750mn is already being allocated for the construction of an infrastructure, largely in the gas sphere, which will reduce the sphere of Gazprom’s economic dictates.

In spite of the change in Oettinger’s attitude regarding a European energy union, Poland sees the start of the development of reverse pipeline flow on the continent as its own minor victory. The Western press is widely quoting the Polish Prime Minister, Donald Tusk, who still hopes to convince the EU to conduct collective negotiations with Gazprom and demand a uniform gas price for all member-states – even if Brussels is currently demonstrating polite restraint.

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According to information obtained by The Ukrainian Week, Polish diplomacy in Brussels is actively pushing a formula, which, as far as it is possible, would also allow Kyiv to join this common European Energy Security System. “Previously, Ukraine’s argument was only pertinent in the context of gas pipelines transiting its territory,” said a diplomat from the European Department of the Ministry of Foreign Affairs of France. “They thought that if anything, this problem could be resolved via geographic means: by building the Nord Stream, then the South Stream, or Nabucco Pipeline. Today, the general European view has changed significantly. Europe has begun to see Russia not only as an economic opportunity, but also as a political and military threat. Hence the decision on the EUR 750mn. The discussion of means for reducing dependence on Russia, including the diversification of energy sources and the development of alternative energy, is planned.”

The first tranche of the European Commission, if efficiently applied, will allow the EU to increase its winter gas reserves from the current 30 day supply to one of 50–60 days. Within the framework of EU partnership, Ukraine could also potentially join such reserve schemes, which would mean that it would not be completely without gas, should there be another row with Russia. The prospects of this should be cleared up during a meeting of EU leaders in June.

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