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Beware, Europe: Winter Is Coming

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Walter Russell Mead, The American Interest

When the tug-of-war between the EU and Russia over Ukraine really began to escalate this spring, many analysts pointed out that it was happening at an opportune time for the West. Events were heating up along with the weather, which meant demand for natural gas—arguably Moscow’s strongest geopolitical lever in Europe—was at a cyclical low point. But the mercury will drop later this year, and when it does, European policymakers will have a potential gas supply crisis on their hands.

That’s because, despite efforts to work around it, roughly 40 percent of Europe’s Russian gas supplies transit Ukraine. Kiev and Moscow have been squabbling over gas prices and unpaid bills for months now, and just recently Russia decided to cut off supplies to Ukraine, moving to a pay-as-you-go model. For now, that hasn’t been keenly felt. Ukraine has plenty of gas in storage, and demand is low while temperatures are high. But when winter comes, and demand goes up, most expect Ukraine to start siphoning off the supply passing through from east to west, and that spells bad news for the rest of Europe. The FT reports:

Christophe de Margerie, chief executive of Total, the French oil major, told the Financial Times that Europe could struggle to find alternative sources of supply, even without Moscow retaliating against western sanctions by cutting energy supplies.

“Not only Total but the industry is saying: be careful. It has nothing to do with an embargo. But if for technical reasons, if for sabotage reasons there is a shortage, yes, we will have difficulties in providing gas from other sources,” he said.

European policymakers have agitated for the U.S. to start exporting its shale gas in liquid form, but for a number of reasons that won’t be an effective solution. Europe has some hard months ahead of it, but it should use this as an opportunity to exploit its own shale energy reserves, and fully embrace nuclear energy as a significant supply of green baseload power.

The American Interest, 11 July 2014