KEY POINTS

  • Russia is the EU’s primary external source of energy. In 2018, Russia’s share of the European gas market rose to a record high, meaning that Europe is more dependent on Russia than ever. (Reuters)
     

  • Europe’s dependence on Russian gas offers Russia powerful leverage over many European states (The Economist) and allowing it to threaten the unity of NATO (Sky News), (The Economist)
     

  • Russia has a long record of utilizing its energy resources to blackmail and strong-arm other nations. (Baker Institute)


EUROPE’S GROWING ADDICTION TO RUSSIAN GAS

  • According to the European Commission, the EU imports 55% of all the energy it consumes, at an average cost of around 266 Billion Euros per year. Energy also makes up around 15% of total EU imports. (European Commission)
     

  • Russia is currently sending record volumes of gas to Europe, and is projected to account for one third of the EU’s supply requirements through 2040. (IEA)

  • Meanwhile, domestic European gas production is declining, and its import requirements are expected to increase by almost 50 Bcm/year up to 2024. (S&P Global)

    • Domestic production of natural gas has declined by 52%, a change that leads to a decrease in self sufficiency, the import ratio rising from 75% to 88% as a result. (BP Energy Outlook)

  • In the short term at least, natural gas also is increasingly necessary to make up for the loss of coal as European countries shift towards cleaner energy. (Bloomberg)

  • In 2018, Gazprom supplied 37% of Europe’s natural gas, with 14 countries getting more than 50% of their gas from Russia. Gazprom also expects its 2019 natural gas shipments to Europe to amount to a record 194 to 204 bcm, more than double total U.S. gas exports in 2018. (Bloomberg)
     

    • This projection would be fairly consistent with the numbers calculated in 2018, in which Gazprom supplied a total of 200.8 bcm of gas to European countries, a large increase in just 3 years from 158.6 bcm in 2015. (Gazprom Export)
       

  • In more hopeful news, however, though the US is still a relatively minor source of energy for the EU, the EU plans to increase US LNG imports to 8 billion bcm per year by 2023, more than double the level of 2018. (Forbes)
     

    • Between May 2, 2019 and July 2018, EU imports of US liquefied natural gas have already increased by 272%. (Forbes)


Russian Gas Imports - Individual Countries

  • In billion cubic meters, Germany, Turkey, Italy, the United Kingdom, and France are the largest importers of Russian gas. (Gazprom Export)

  • Germany is the biggest buyer, importing 58.5 bcm from Gazprom in 2018. (Gazprom Export)

    • It is also Europe’s biggest economy, and in 2018 Germany imported 9.7% more gas than it had in the previous year, increasing the volume imported to 126 bcm. (Reuters

  • In 2018 Italy bought 22.7 bcm of its natural gas from Gazprom. (Gazprom Export)

    • Meanwhile, the total it imported in 2018 was 56.2 bcm of pipeline imports and 8 bcm of LNG imports. (Statistica)

  • France is another one of Gazprom’s most important markets, receiving 12.92 bcm from the company in 2018. (Gazprom Export)

    • Gazprom has also raised gas exports to France by 58% in five years. (World Oil)

  • Many former Soviet states and satellites, as well as countries in close proximity to Russia, are still highly dependent on Russian natural gas.

    • From 2017-2018, either 100% or nearly 100% of natural gas imports to Finland (export.gov), Hungary (OECD), Bulgaria (Reuters), Slovakia (Euractiv), and the Czech Republic (OECD) came from Russia.

    • As of May 2019, though Bulgaria is still 100% reliant on Russian gas, it has started building a pipeline with Greece that will hopefully lift this dependence. (Reuters)

    • Hungary signed an agreement in 2017 to support for another Russian pipeline, the Turkish Stream Pipeline, at the same time that Poland announced its plans to wean itself off Russian gas. (Bloomberg)

    • Gazprom increased its exports to Austria during the beginning of 2019 by almost one third, compared to numbers from last year. (LNG World News) In August 2018 it received about 85% of its gas from Russia. (EU Observer)

    • In 2018 the share of Russian gas in imports to Poland fell to 66.8%, compared to 70.4% in 2017. (Reuters) These numbers are expected to get lower after recent agreements to source more LNG from the US, Norway, and Qatar, (New York Times) and Poland hopes to phase out Russian gas entirely by 2022. (Financial Times)

    • Unlike many of its neighbors, Lithuania has substantially reduced its dependence on Russian natural gas. In 2018, Gazprom accounted for around 54% of its energy supplies. (Eurasian Business Briefing)


ENERGY BLACKMAIL

The Kremlin’s use of energy coercion has been going on for decades and has affected many of Russia’s surrounding countries.

  • In 1990 it interrupted oil supplies to the Baltic states in an unsuccessful effort to crush the region’s independence movements. (Baker Institute)

  • Russian oil producer Lukoil interrupted supplies of crude oil to the Mažeikai refinery in Lithuania nine times in 1998 and 1999 as a result of its competition with the US to acquire a stake in the facility. (Baker Institute)

  • In 2005, when the Orange Revolution interfered with Russian plans for the Ukrainian presidency of pro-Russian Viktor Yannukovych, Russia tripled gas prices for Ukraine. (Euromaidan Press)

    • Ukraine reluctantly accepted this, albeit with the request that price increases be phased in gradually.

  • In January 2006, in the midst of continued disputes over pricing and supply negotiation, Gazprom reduced pressure in pipelines heading to Ukraine, eventually cutting off supplies entirely for a day. (Reuters)

  • Many of these methods not only affect the country to which they are directed, but many other countries as well. When Gazprom cut off all supplies for Ukraine’s use again in 2009, pressure dropped “as far west as France and forced businesses and schools across southeastern Europe to shut down amid severe cold.” (Baker Institute)

    • Kiev claimed that these actions were equivalent to blackmail to extort an unreasonably high price price for the gas it sells to Ukraine. (Reuters)

    • Countries wholly dependent on Russian gas, such as Slovakia and Bulgaria, found themselves especially helpless (The Slovak Spectator)
       

  • In 2014, Gazprom raised the price of gas exports to Ukraine from $268.5 per mcm to $485 per mcm in under a week. Suspiciously, this increase occurred just after Russia’s invasion of the Crimea. (Baker Institute)

    • Gazprom cited Ukraine’s gas debts as the reason for the increase--however, these debts had existed for years since the 2009 supply crisis, and Gazprom had not made any previous, sudden changes to gas pricing for supplies into Ukraine. (Baker Institute)
       

  • In 2018, Russia “cut off the gas supply to Ukraine amid abnormal frosts, having lowered pressure in the pipe just minutes before it was supposed to start supplying gas to Ukraine according to the ruling of the Stockholm arbitration court.” (Euromaidan Press)

    • This was Russia’s revenge for Ukrainian gas company Naftogaz’s victory over Gazprom in the legal battle over the 2009 gas contract and the events of 2014, as well as the transit contract between the two countries. (Euromaidan Press)