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Russia’s Energy Risk

It’s funny that no matter how many warnings they get, Europe simply refuses to act to decrease their dependence on Russian energy. This one comes from the Financial Times:

“No matter how much confidence European leaders have expressed about Russia’s reliability, there is still a lot of risk associated with it,” says Vladimir Milov, a former deputy energy minister. Europe is deepening its dependence on Russian oil and gas at the same time that relations continue to sink. Europe, led by Germany and Italy, already relies on Russia for one-quarter of its gas supplies – an amount expected to rise to half by 2030.

The question of cross-border oil supplies is less problematic. During the brief Czech crisis, refiner Unipetrol tapped stored reserves and boosted shipments through an alternative pipeline. It remains unclear what the true cause of the cut was, and the issue was raised during a mid-October meeting in Paris between Andris Piebalgs, EU Energy Commissioner, and Sergei Shmatko, Russian Energy Minister, according to a person close to the talks.It is shipments of gas – that for the moment pass through trouble spots such as Ukraine and Georgia – that cause more worry.“In the short-term, Europe has much less leverage against Russia’s actions than in the long-term,” says Mr Milov. Mr Milov, a harsh critic of state gas giant Gazprom, advises Europe to boost its stock of gas storage tanks, while researching alternative fuel sources to lessen dependence on Russian gas and prepare for politically-tinged shortfalls.