. 24/7 Space News .
Europe Growing Dependent On Russian Energy: IEA

Russia's Gazprom, is the world's biggest gas producer.
Paris (AFP) Dec 05, 2004
Europe is becoming more and more dependent on Russian energy supplies, making it vulnerable to high prices that help Moscow reach growth and investment objectives, IEA executives say.

"The main risk is not so much that Europe will find itself in a situation with having no gas, but much more that a dependency on a powerful monopolistic supplier would put upward pressure on prices," Noe van Hulst, IEA director of long-term coordination and policy analysis said Friday.

According to the International Energy Agency's figures, the European Union will depend on imported oil for 94 percent of its total needs by 2030 if no changes are made before then.

"Gas import dependence will go up from more or less 49 percent now to 81 percent in 2030," van Hulst told AFP.

EU countries currently buy around 40 percent of their natural gas - used primarily for electricity production - from Russia, which is to say mainly from the state-controlled gas monopoly Gazprom.

"Europe will become increasingly dependent on Gazprom," van Hulst said.

The agency's chief economist, Fatih Birol, said last week that German moves to increase Russian gas imports were risky because Moscow "will need very high oil and gas prices in the coming years to maintain its growth targets".

Germany's appetite for fossil fuels will also grow as a result of its decision to abandon nuclear energy, which currently accounts for one third of the country's needs, the IEA economist added.

Because European energy needs are rising sharply while EU supplies remain stable, "it becomes of increasing importance what is happening in Russia, will we see any reform of the gas sector, yes or no," van Hulst said.

"Well, it seems to be the case that we're not going to see much of that unfortunately."

Gazprom, the world's biggest gas producer, is creeping into the electricity and oil sectors as well, and has shown interest in Yuganskneftegas, the core production unit of embattled Russian oil giant Yukos.

An auction to decide the unit's fate is scheduled for December 19.

A takeover would put control over enormous resources back in the hands of the Russian state.

Van Hulst of the IEA noted that Gazprom would need massive sums of money for such a bid, and has been investing less in developing new supplies of its own, which could become a problem for European clients.

"You become dependent on whether they (Gazprom) will come up internally with the necessary investments to keep the gas flowing at a reasonable price," he said.

"They need huge, huge investments in the sector to be able to come up with these increasing supplies of gas."

German Chancellor Gerhard Schroeder is reported to have urged top German banks and energy companies to create a consortium to invest in the Russian energy sector.

But in light of what is happening with Yukos, which some say is being split up to punish the political ambitions of jailed founder Mikhail Khodorkovsky, investors want to be assured of a sound financial environment.

Whatever happens in Russia, Europe needs to diversify its sources and suppliers, the IEA says.

"Governments have been too early in thinking there would never be supply issues with natural gas and electricity," IEA overall director Claude Mandil was quoted as saying Thursday by the Financial Times.

Liquid natural gas and coal are among the alternatives, but they also leave Europe dependent on foreign suppliers.

As a result, some analysts predict a comeback of nuclear energy, a key source of electricity in Britain, France, Finland and Spain.

"In Finland, they have even decided to build a new nuclear reactor ... which is in a sense an interesting case because it's the first one in a (soon to be) liberalised electricity market," van Hulst pointed out.

He nonetheless added that "from a purely economic point of view it's not the most logical choice for power generators. There are a lot of heavy up-front investments."

"For that reason we don't see a lot of that happening in liberalised electricity markets, even in those countries where its not a big political issue. The economics of it is not always that favorable."

All rights reserved. � 2004 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

Related Links
SpaceDaily
Search SpaceDaily
Subscribe To SpaceDaily Express

Analysis: Worst Not Over Yet For Oil
Singapore (UPI) Nov 25, 2004
Over the last three weeks, oil prices have fallen a dollar or two as a sign of a falling demand which started around July have become clearer. Yet the worst is not behind as any poor winter conditions could send prices rising back again.



Thanks for being here;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor
$5 Billed Once


credit card or paypal
SpaceDaily Monthly Supporter
$5 Billed Monthly


paypal only














The content herein, unless otherwise known to be public domain, are Copyright 1995-2016 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement All images and articles appearing on Space Media Network have been edited or digitally altered in some way. Any requests to remove copyright material will be acted upon in a timely and appropriate manner. Any attempt to extort money from Space Media Network will be ignored and reported to Australian Law Enforcement Agencies as a potential case of financial fraud involving the use of a telephonic carriage device or postal service.