KEY POINTS

  • Russia is the EU’s primary external source of energy. In 2015, Russia provided 37% of the EU’s natural gas imports and 29% of crude oil and coal imports.
     

  • The EU’s strict environmental regulations are exacerbating its dependence on imported energy. Europe is now more dependent on Russian natural gas than ever.
     

  • Europe’s dependence on Russian gas offers Russia powerful leverage over many European states, potentially undermining the unity of NATO.
     

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


EUROPE’S GROWING ADDICTION TO RUSSIAN GAS

  • According to the European Commission: “The EU imports 54% of all the energy it consumes, at a cost of more than €1 billion per day. Energy also makes up more than 20% of total EU imports.”
     

    • This includes 69% of its natural gas and 90% of its crude oil.
       

    • In recent years, EU demand for natural gas has been rising while its natural gas extraction has been declining.
       

  • EU environmental regulations are a factor exacerbating the dependence of many European countries on imported energy sources, including relatively cheap natural gas from Russia.
     

    • On July 31, 2017, the European Commission adopted stringent regulations requiring coal-fired power plants to introduce costly upgrades or shut down. Several EU members (including France, Italy, and the UK) decided to phase out coal entirely.
       

    • In December 2017, France also entirely banned natural gas and oil extraction within its borders.
       

  • In 2017, the EU imported a record amount (194.4 bcm) of natural gas from Russia, almost 40% of Europe’s total natural gas imports.
     

    • This is up from 178.3 bcm in 2016 and 158.6 bcm in 2015.
       

    • Russian gas deliveries to Europe are expected to be around 180 bcm in 2018 (the second-highest amount on record).
       

    • The EU’s other natural gas imports come from Norway (33% of total imports), North Africa (14%), Qatar (5%), and others (8%) including the US.
       

  • The US is still a relatively minor source of energy for the EU. However, American liquefied natural gas (LNG) exports are growing quickly in Europe and around the globe.
     

    • In the third quarter of 2017, 6% of the EU’s LNG was imported from the US; the purchasers were Poland, Portugal, Spain, UK, Italy, and Lithuania.


Russian Gas Imports - Individual Countries

  • Germany - 60% of its natural gas imports came from Russia in 2016, with an additional 11% from Norway.
     

    • About 40% of the gas Germany currently consumes comes from Russia. If Nord Steam 2 moves forward and Dutch output continues to decline, this number will likely be over 50% by 2025.
       

  • Italy - 41% of the country’s natural gas imports came from Russia in 2016, with an additional 29.5% from Algeria and 8.5% from Qatar.
     

  • France - 42.3% of its natural gas imports came from Norway in 2016, with an additional 20.3% from Russia and 12.6% from the Netherlands.
     

  • UK - 66.6% of its natural gas imports came from Norway in 2016, with an additional 19.9% from Qatar and 9.1% from the Netherlands.
     

  • Many former Soviet states and satellites are still highly dependent on Russian natural gas.
     

    • 100% of the natural gas imports of Finland, Estonia, Latvia, Bulgaria, and the Czech Republic came from Russia in 2016.
       

    • Hungary (95%), Slovakia (98.8%), and Romania (98.9%) purchased almost all of their natural gas imports from Russia in 2016. In July 2017, Hungary signed a deal with Russia’s Gazprom to link the country with the Turkish Stream pipeline by end-2019.
       

    • 74% percent of Poland’s natural gas imports (and 63% of all the gas it consumed) came from Russia in 2016. Given recent agreements to source LNG from the US and Qatar, this number will decline further in the years ahead. Poland expects to completely phase out Russian gas imports by 2022.
       

    • Unlike many of its neighbors, Lithuania has substantially reduced its dependence on Russian natural gas. In 2016, it purchased 61.5% of its natural gas imports from Norway and only 38.5% from Russia.


ENERGY BLACKMAIL

“The Kremlin’s use of energy coercion began even before the USSR actually dissolved in December 1991. For instance, it interrupted oil supplies to the Baltic states in 1990 in an effort to crush the region’s budding independence movements, although to no avail.”
 

  • Between 1998 and 1999, Russia’s Lukoil interrupted crude oil deliveries to Lithuania’s Mažeikiai refinery at least nine times.
     

    • This happened at a time when Russian and American companies were competing to obtain a stake in the refinery. (After unsuccessful ownership stints by an American company and then a Russian company, the refinery has been owned and operated by Polish energy giant Orlen since 2006.)
       

  • In 2005, following the pro-Western Orange Revolution, Russia tripled Ukraine’s gas price. Ukraine reluctantly accepted this, albeit with the request that price increases be phased in gradually.
     

    • Afterwards, Russia claimed that 7.8 bcm of gas in Ukrainian storage tanks were missing and reduced pressure in the pipelines bound for Ukraine.
       

  • In January 2009, citing Ukraine’s gas debt, Russia shut off natural gas deliveries to Ukraine, “which caused pressure drops as far west as France and forced businesses and schools across southeastern Europe to shut down amid severe cold.”
     

  • In late March/early April 2014, following Russia’s invasion of Crimea and the outbreak of a Russian-sponsored separatist insurgency in the Donbass, Gazprom almost doubled the price of Ukraine’s natural gas.
     

    • Russia cited money Ukraine owed to Gazprom as the reason; however, Gazprom had tolerated Ukraine’s debts for years, especially when pro-Russian elements governed the country.
       

  • In March 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.”
     

    • In response to Russia’s tactics, Ukraine has somewhat reduced its natural gas consumption and has signed deals to get fuel from Poland and other European countries.
       

    • Russian South Stream project, which was to bypass Ukraine, was put on hold in the wake of Russia’s invasion of Ukraine and western sanctions.