In the light of Russian intervention in Crimea and its annexation to Russia after the referendum, The EU and the United States have imposed travel bans against Russian officials and economic sanctions against Russia. The consequences of these sanctions can be felt by both Russia and the EU countries to different extents.
Russia supplies the European Union with more than 25% of their gas and oil imports. Russia also has significant trade interest with the EU that is harmful to compromise. Russia is reliant on the revenue from gas and oil to boost the growth of their emerging economy.
Slovakia, Poland, Hungary and the Czech Republic are examples of EU countries that currently import between 70% and 100% of their gas from Russia. The growing Russian economy has provided a lucrative market for products from Germany and the UK. Russia has created a cartel of gas exporting countries, the Gas Exporting Countries Forum which groups countries that hold 70% of the world’s gas reserves.
This may mean its influence on the global gas market goes beyond its own resources. Russia is a major player in the Syrian conflict and has established ties with the new Egyptian regime which can have impact on international security of oil supply from the Middle East and North Africa.
There still can be a diplomatic deal that minimises the impact of the escalation of the crisis. However, regardless of this, the EU countries will be, as they have been in the last decade, working on measures to ensure contingency plans to diversify its supply and its dependency on the Russian gas.
Although the EU is better prepared for a new supply disruption compared to 2009, it has not managed to reduce the share of energy supplies from Russia.
Several options are examined such as Gas export from America, Gas from the East Mediterranean, Shale gas, renewables, and other options. There are many questions related to the feasibility, cost and timeframe of implementation of each option. All these will be discussed by the world’s leading experts at the Global Energy Conference taking place on the 12th and the 13th of May in London.