March 24, 2016 by AK
Amber Rudd, the UK energy secretary, is expected to offer these arguments against Brexit:
Relying on energy from abroad is not without risk. We have seen how countries such as Putin’s Russia use their gas supplies as a tool of foreign policy. Threatening to cut off supplies or drastically increase prices…
As a bloc of 500 million people, we have the power to force Putin’s hand. We can coordinate our response to a crisis. We can use the power of the internal market to source gas from elsewhere. We can drive down the price of imports, as has happened recently in eastern Europe.
To put it plainly – when it comes to Russian gas, united we stand, divided we fall.
I agree – but how much does it matter for the UK? And how much credit does the EU deserve for bringing down the price of Russian gas?
It means Gazprom provided 15% of the gas used in the UK in 2015, less than half Gazprom’s share in EU-28 consumption. Cedigaz estimates that Gazprom supplied 31% of natural gas used in Europe in 2015.
As one can see from Table 4.4, the UK only imported 3.5 bcm by pipeline from the Netherlands and Belgium, and 27 bcm by pipeline from Norway. This means that most (probably all) of the gas sold by Gazprom to UK importers was not physically pumped from Russia but was swapped for gas produced in Norway. If Russia turned off the tap, this flow wouldn’t automatically stop.
In other words, the continent may be at Gazprom’s mercy but the UK itself, hardly. This 2014 article has a chart, dated but still relevant, showing the UK as the third least Gazprom-dependent European country.
There’s also LNG, increasingly available and cheap, with some spare capacity at the three existing terminals and a fourth one to open this year.
(To be continued.)