BIG TICKET GIVEAWAY

Win 2 tickets to every event for a year! Click here to enter.

Present by The Daily Herald
The Herald of Everett, Washington
HeraldNet on Facebook HeraldNet on Twitter HeraldNet RSS feeds HeraldNet Pinterest HeraldNet Google Plus HeraldNet Youtube
HeraldNet Newsletters  Newsletters: Sign up | Manage  Green editions icon Green editions

Calendar


HeraldNet Headlines
HeraldNet Newsletter Delivered to your inbox each week.
Published: Sunday, July 20, 2014, 12:01 a.m.

Tougher sanctions on Russia has risks

WASHINGTON — Energy politics underlie the explosive Ukraine crisis, as Europeans weigh U.S. calls for tougher sanctions against the ability of Russia to disrupt gas supplies this winter.
The dilemma for European governments increased this week, as the Obama administration announced strong new penalties against the Russian energy and financial sectors. Europe's initial response was tepid, a sign that many governments fear Moscow's energy leverage more than U.S. displeasure.
The Russians turned up the pressure valve, too. Prime Minister Dmitry Medvedev called the U.S. sanctions “evil” on Thursday and warned: “We may go back to the 1980s in our relations with the states that are declaring these sanctions.”
The catastrophic risks of the Ukraine confrontation were highlighted Thursday by the shoot-down of a Malaysia Airlines passenger plane flying near the Russia-Ukraine border. Ukrainian government officials and pro-Russian separatists traded blame for the disaster, which showed the potentially devastating consequences as the Ukraine confrontation escalates.
Russia's dominance as an energy supplier to Europe is its economic trump card in this fight, at least in the short run. European governments may be willing to squeeze Moscow, but not so tightly that they risk a severe shortage of gas supplies.
A stark preview of what could be ahead was prepared last month by Total, one of Europe's largest energy companies. The unpublished study, provided by a company official, shows that by scrambling, Europe could cope with a cutoff of Russian gas exports through Ukraine this winter. But it would be severely affected by a total halt in Russian deliveries.
The Total study estimated that about 30 percent of Europe's natural gas comes from Russia, and that more than half this volume is transported through Ukraine. If Russia interrupted these, the study forecast that it would be “feasible” to compensate through adjustments. These would include: use of gas stored in such countries as Italy and Hungary; transport of Russian gas through two alternative corridors, the Yamal pipeline through Belarus and a Baltic line known as Nord Stream; increased gas shipments from Norway, the Netherlands and North Africa; and increased imports of liquefied natural gas (LNG).
This coping scenario may sound reassuring, but the Total study notes that it would impossible without a “collective and coordinated approach” in Europe and that “cooperating with Gazprom [the Russian energy giant] is essential.” Unless Gazprom agrees, it would be impossible to reroute flows through the Baltic and Belarus pipelines, for example.
Countries that rely most on Russian gas could suffer acutely, including Bulgaria, Romania, Hungary and Slovakia. Italy, too, is heavily dependent on Russian gas, but U.S. officials say Rome's shortfall could probably be filled from Libya and Algeria.
Ukraine will likely ake the biggest hit. Its imports of Russian gas totaled about 28 billion cubic meters last year, or just over half Ukraine's total consumption. A senior Obama administration official estimates that even if you assume that Ukraine reduced demand, obtained reverse pipeline flows from neighboring countries and made maximum use of stored gas, it would still have a shortfall of 8 percent to 15 percent of its normal supply. If Ukrainians can't get that gas from Russia, they may be very chilly this winter.
What if a new Cold War develops and Russian gas exports are halted? The Total study warns, “Winter demand could not be satisfied” in Europe, because “there is simply not enough gas to cope with no Russian exports.” U.S. officials agree. Analysts doubt that Russia will halt exports, even through the Ukraine pipeline. That's because Moscow needs the money. Supply disruptions would “decimate the Russian gas industry and starve Gazprom” when it needs money to invest in new facilities, argues the administration official.
Russia's energy weapon is potent, in the short run, but its impact will decline sharply over the next decade as U.S. production of shale oil and gas rises — and America becomes a major energy exporter. By 2020, according to administration estimates, the U.S. could be able to export over 90 billion cubic meters of LNG annually, or about half of the gas Russia now supplies Europe. At that point, Moscow loses its chokehold.
The trick for the U.S. and Europe will be navigating the next few years. This transition will be impossible without the dreaded buzzword of an “energy policy,” coordinated across the Atlantic, which gives private companies clarity and confidence to invest. Europe may face a cold winter, especially after Thursday's horrifying shoot-down of the Malaysian jet, but there's a possible warming trend ahead.
David Ignatius is a Washington Post columnist. His email address is davidignatius@washpost.com.


Share your comments: Log in using your HeraldNet account or your Facebook, Twitter or Disqus profile. Comments that violate the rules are subject to removal. Please see our terms of use. Please note that you must verify your email address for your comments to appear.

You are logged in using your HeraldNet ID. Click here to update your profile. | Log out.

Our new comment system is not supported in IE 7. Please upgrade your browser here.

comments powered by Disqus
digital subscription promo

Subscribe now

Unlimited digital access starting at 99 cents, or included with any print subscription.

Herald Editorial Board

Peter Jackson, Opinion Editor: pjackson@heraldnet.com (@PeterJHerald)

Carol MacPherson, Editorial Writer: cmacpherson@heraldnet.com

Neal Pattison, Executive Editor: npattison@heraldnet.com

Jon Bauer, News Editor/Content Development: jbauer@heraldnet.com

Josh O'Connor, Publisher: joconnor@heraldnet.com

Have your say

Feel strongly about something? Share it with the community by writing a letter to the editor. Send letters by e-mail to letters@heraldnet.com, by fax to 425-339-3458 or mail to The Herald - Letters, P.O. Box 930, Everett, WA 98206. Include your name, address and daytime phone number. (We'll only publish your name and hometown.) We reserve the right to edit letters, but if you keep yours to 250 words or less, we won’t ask you to shorten it. If your letter is published, please wait 30 days before submitting another. Have a question about letters? Contact Carol MacPherson at cmacpherson@heraldnet.com or 425-339-3472.

HeraldNet highlights

This is arena food?
This is arena food?: Xfinity rolls out shiny new menu for Tips games, other events
Big-top dreams
Big-top dreams: Young ringmaster followed his heart to the circus tent
'Maze Runner' gets lost
'Maze Runner' gets lost: Film has its moments, but seems overly familiar
All the right notes
All the right notes: 5th Avenue Theatre's 'A Chorus Line' feels fresh