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Gazprom’s New Strategy of Control: Recapturing the EU Gas Market
Gazprom’s New Strategy of Control: Recapturing the EU Gas Market
Britain’s exit from the European Union is a huge blow to European project with potentially devastating implications for its’ latest flagship policy – Energy Union. The United Kingdom has been one of the strongest proponents of EU energy market integration, liberalization, and diversification. By using the power of consorted action, Energy Union was intended to confront gas monopolies, such as Gazprom, in the fight against price discrimination and market distortions. As fallout from Brexit rattles Brussels, Kremlin-backed Gazprom is well positioned to seize the moment to recapture this lucrative market for Russian gas. This article takes a closer look at recent developments in European Union energy policy and examines opportunities for Gazprom to gain a stronger influence over downstream energy relations in the continent.
The State of the Energy Union was created by the European Commission in February 2015 on the following promises: diversification through embracing LNG exports from alternative suppliers, market integration by building gas interconnections among EU member states, and ownership unbundling of critical gas infrastructure. Despite member states’ pledge for unconditional support of this policy, public support for the Energy Union has been dismal. The controversial Nord Stream- 2 pipeline along with Gazprom’s recent acquisition of strategic gas storage facilities within the EU have raised eyebrows across Europe’s capitals. Delays in building critical gas transmission lines between northern and southern Europe further eroded public confidence in European Energy Union.
Yet, there have been some positive developments for this policy as a result of increasing competition and liberalization of the EU gas market. Eastern and central Europeans zealously embraced growing LNG exports from Qatar, Australia, and the United States. Preference for LNG over piped gas in Lithuania and Poland has already cost Gazprom billions in lost revenues from re-negotiating purchasing contracts.
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EU Energy Union May Be Biting Off More Than It Can Chew
EU Energy Union May Be Biting Off More Than It Can Chew
With oil and gas still flooding the scene it’s a buyer’s market. For some however, picking isn’t easy. For the European Union specifically, an abundance of choice comes with its own set of logistical and geopolitical problems.
February 4 marked the launch of the EU’s Energy Union – an ambitious project that will establish a long-term plan for European energy and climate policy and set the politico-economic union on the path towards decarbonization. The doubters are many, but EU Commissioner for Climate Action and Energy Miguel Arias Canete confirmed the plan “will contain concrete measures” as well as “full and proper enforcement.” The framework strategy – still very much under discussion – is due for adoption on February 25.
Among the goals of the Union are enhanced energy efficiency, diversification and flexibility, in addition to increased deployment of renewable energy. More specifically, the EU is targeting electricity interconnection of 10-15 percent, a renewable share of 50 percent, as well as emissions reductions of more than 30 percent by 2050 – initiatives that will cost approximately $3 trillion, or nearly 15 percent of the current EU GDP. Addressing these goals will require massive infrastructure overhauls and timely investment, not to mention cooperation among the 28 vastly different member nations. In the early goings, that last bit is proving tough.
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