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Beyond Dependence: How to Deal with Russian Gas

Author: Pierre Noël
November 7, 2008

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Europe's dependence on Russian gas has become a central issue in the European Union's internal debates about its relationship with Russia and its energy policy. The recent war between Georgia and Russia has added a sense of urgency to the EU's search for a better Russia policy, fuelling fears that Moscow might use its power as a major energy supplier to blackmail Europeans into submission. Following the war, Gordon Brown, the British prime minister, wrote: "No nation can be allowed to exert an energy stranglehold over Europe, and the events of August have shown the critical importance of diversifying our energy supply."

Such concerns are exaggerated - and miss the real problem. Two essential figures should inform the debate. First, Russian gas accounts for just 6.5% of the EU's total primary energy supply, a share that has barely changed since 1990. Second, Russia's market share of EU gas imports has been halved since 1980, from 80% to just over 40%. Contrary to popular perception, overdependence on Russia is not a pressing issue for Europe as a whole.

Yet there are important differences between EU Member States. The EU's eastern national gas markets are, for the most part, small but highly dependent on Russia, whilst the bigger western markets benefit from greater supply diversity. And while the countries that critically depend on Russia for their gas are to be found among the new Member States, Gazprom's big clients are Germany and Italy, which together account for almost half of all Russian gas consumed in the EU.

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