Russian Gas: There Is No Alternative For Europe
The sanctions are now in their second year; the ruble is still not quite itself; and national champions Gazprom and Rosneft are both bracing for what can generously be called a down year. Still, while Russia’s political relationship with the west continues to be redefined, the broader element of codependence remains relatively unchanged – though its worth is hotly disputed. Nowhere is that dispute more pronounced than in the energy sector.
To be sure, Gazprom is in trouble. Last year, the gas giant saw its profits fall 70 percent to $3.3 billion. Through the first three quarters of 2014, Gazpromdeliveries fell 3 percent, 13 percent, and 8 percent to Europe, former Soviet republics, and domestic consumers respectively. Its debt burden is up and opportunities for long-term credit are few. Moreover, its legal woes are growing by the day. Recent antitrust filings from Poland and Ukraine join the European Commission’s (EC) April charges that could cost the company up to 10 percent of its global turnover.
For its part, Europe – more specifically, the European Union – is still attempting to define the terms of its own energy security. Plans for the 28-member bloc to unite in an energy union are still a go, though only marginally more clear than when they emerged. In a recent statement at the European Economic and Social Committee’s Plenary Session, Energy Union commissioner Maros Sefcovicdescribed the goals of the union as follows: a fully integrated energy market; energy efficiency above all else; decarbonization; a commitment to R&D; and securing supply through solidarity and trust.
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