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Ukraine crisis jolts Europe to push for secure energy supply

MADRID (AP) – Surging energy prices and fears of a Russian invasion of Ukraine are making European leaders think hard about energy security – particularly their decades-old reliance on Moscow for natural gas.

The crisis shows Europe’s vulnerability after years of limited progress in completing an “energy union” – a 2015 vision to allow affordable gas and electricity to flow across borders while diversifying suppliers and reaching climate goals. As renewables like solar and wind are slowly built up and coal and other fossil fuels are phased out, Europe still needs natural gas, and it’s dependent on Russia to get it.

That came into sharp relief as Europe’s gas supply dropped and prices soared partly because Russia sold less gas than normal, squeezing households and businesses with rising costs.

With gas reserves low and concerns a war could interrupt pipeline flows from Russia, the European Union (EU) is focussed on getting liquefied natural gas (LNG), by ship from the United States (US), Qatar, Algeria and elsewhere until renewables catch up.

Doubling down on renewables would help reduce dependency on Russian gas, EU Energy Commissioner Kadri Simson said on Monday, but reiterated that energy security was critical. An advisory group to coordinate the EU’s gas supply security met yesterday because “it’s important that contingency plans are ready for the worst-case scenario”, she said.

The 27-nation EU is “on the safe side for this winter” but doing “everything possible to get rid of this dependency”, European Commission President Ursula Von der Leyen said on Saturday at the Munich Security Conference. She accused Russia’s state-owned gas giant Gazprom of “deliberately trying to store and deliver as little as possible while prices and demand are skyrocketing”.

Russia has fulfilled long-term contracts but failed to sell additional gas on the spot market, while pushing for German approval of its contentious Nord Stream 2 pipeline as a way to solve Europe’s gas squeeze.

“We are aware about the low resources of gas in European countries,” Russian Energy Minister Nikolai Shulginov said yesterday at a forum of gas producers in Qatar, according to a provided English translation. He said long-term gas contracts help curb price volatility and that Russian energy companies are “fully committed” to fulfilling existing agreements.

Countries like Lithuania and Poland have managed to reduce Russian gas imports. But Russia accounts for more than one-third of the EU’s supply, and its dominance is entrenched in the Baltic states, Germany, Italy and parts of southeastern Europe. The core issue is that the 27 EU countries retain substantial control over energy policy.

Clashing regulations and standards make transport of gas from one country’s system to another difficult, even when the network to do it actually exists. Energy companies moving gas across borders, for example, are sometimes charged tariffs more than once or twice.

After Russia seized Ukraine’s Crimea region in 2014, diversifying energy supplies to reduce Russian reliance was enshrined in the EU’s 2015 energy union plan. Since then, there has been some significant progress: More two-way pipeline connections have been built and more LNG import terminals are planned.

A new pipeline transports gas from Azerbaijan to western Europe via Turkey and Greece.

There’s also a planned pipeline extension from northeast Greece to southern Bulgaria that would relieve Bulgaria’s total dependence on Russian gas. And Greece is moving forward with plans to build a facility to take in LNG imported by sea.

Poland has been working on pipeline connections with neighbouring countries, including the Baltic Pipe, which is set to deliver Norwegian gas to Denmark and others starting in 2023.

The country also has built the Swinoujscie LNG port on the Baltic Sea, near the German border. Since 2015, the facility has helped reduce gas imports from Russia via the Yamal pipeline by a third, to less than 60 per cent of its total gas imports.

Polish authorities have vowed not to extend the Yamal deal when it expires next year, relying on more LNG from places like the US, Qatar and Australia.

Governments also are talking about creating a strategic reserve of gas, either shared among several countries or organised at the EU level. Energy-consuming countries have done that with crude oil since the 1970s.