Energy Union and EU Global Strategy: The Undefined Link

Written by | Tuesday, February 23rd, 2016
European Values

Shahrazad Far and Richard Youngs (Swedish Institute for European Policy Studies)

The relationship between energy and foreign policies of the European states is closely linked. This is caused by the fact that the EU countries are dependent on imported gas and oil from Russia, Norway, the Middle East and North Africa. The lack of EU‘s energy independence is then, in this respect, one of the key factors that determine the formation of EU’s geopolitical strategy. What are the main challenges that are emerging in this area?

The whole process of the Energy Union creation has been accelerated by the Ukrainian crisis and the Russian annexation of Crimea in 2014. At that moment, weaknesses of the EU Member States’ energy agreements came to light. The high dependence of Finland, Bulgaria and the Baltic states on Russian resources is given by the geographic proximity and the particular historical developments. Lithuania’s steps aimed at the diversification of energy sources are, for example, a direct consequence of the deterioration in the relations between the EU and Russia. In March 2014, Lithuania decided to launch the LNG Independence terminal and build a port for liquefied gas in Klaipeda (Lithuania’s only sea port on the Baltic Sea). Thus, it effectively ended its dependence on Russian gas. Kremlin’s, namely Gazprom’s, reaction was fast: there was a reduction in gas prices for Lithuania by 23 percent.

Ukraine, which is not a part of the EU, is an important transit country, with one half of Russian gas passing through it on its way to Europe. Russia is trying to deal with this situation and is planning to stop sending gas through Ukraine by 2019. For Ukraine, this would mean a loss of transit fees and the confirmation of Moscow’s foreign policy discourse against Kiev. The Turkish Stream is to become Russia’s alternative pipeline, whose future is, however – in the context of the worsening relations between Turkey and Russia – rather uncertain. At the moment, the preparations for building the Nord Stream 2 gas pipeline are being made, which would double the capacity of the supplied gas to Germany. The twin of Nord Stream 1 is a joint project of Gazprom, E.ON, Shell, BASF and ENGIE. It is obvious here that the EU, which is trying to be uncompromising on the issue of sanctions, has significant gaps in the energy sector.

However, is this situation caused by the Commission’s poor coordination of Member States, or is it a plan advocated by a consortium of Western energy companies? On the one hand, the Union is seeking to reduce dependence on natural gas from Russia, while, on the other hand, it is building new pipelines that bring Russian gas to Europe. Would not it be easier to follow Lithuania’s path and diversify the energy sector by building terminals for liquefied gas (LNG)?

(The study can be downloaded here: http://www.sieps.se/en/publications/reports/energy-union-and-eu-global-strategy-the-undefined-link-20155)

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