Tuesday

23rd May 2017

Analysis

Cold War politics hang over EU shale gas revolution

  • The former eastern bloc countries still rely on Russian energy (Photo: qwertyuiop)

The shale gas revolution has taken its time to arrive in Europe.

But after years of watching the US plunge head-first into natural gas exploration and of reaping the rewards, Europe's politicians are now deciding whether to join in.

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Most of the political focus has been on potential economic benefits and the environmental consequences of hydraulic fracturing or "fracking" used in unconventional oil and gas drilling.

In western Europe, France and Germany lead a group of countries that have suspended fracking.

But the narrative is different on the eastern side of the old Iron Curtain.

The first major battleground for European natural gas exploration is likely to be in eastern Europe, where the prospect of greater energy security from Russia is a big issue.

It is also possible to detect Cold War overtones to the approach taken by the US oil and gas industry and its government.

Americans are keen to get every dime they can from their own domestic shale gas revolution and new found energy independence.

They want to begin exporting large quantities of liquified natural gas (LNG) to the rest of world, and particularly to Japan and Europe where demand is highest.

But they also see natural gas as a geopolitical issue.

One analyst for the American Natural Gas Alliance (ANGA), a lobby group representing 26 North American natural gas production firms, told this website that Russia is funding environmental groups leading opposition to gas exploration.

There are two big incentives for the US to encourage European countries to move towards natural gas extraction.

Most of the big oil and gas companies are American - Chevron, for example, is exploring over 3 million acres of land in Poland and Romania for its natural gas potential.

Secondly, every kilowatt produced by European natural gas reduces their reliance on Russian energy giant Gazprom.

Most former Communist or former Soviet EU member states are highly dependent on Gazprom exports.

John Lyman, director of energy and environmental policy at the Atlantic Council, a Washington-based think tank, told EUobserver that Poland and Romania are among the most advanced European countries in terms of preparedness for shale gas extraction.

Lithuania is also expected to put shale gas extraction at the heart of its six month presidency of the EU, starting in July.

In April, Valentinas Mazuronis, the country's environment minister, said that shale gas would top the agenda at the first meeting of European environment ministers in Vilnius.

For his part, EU energy commissioner Gunther Oettinger, told reporters earlier this week that shale gas would be a "good instrument" for EU energy negotiations with Gazprom and Russia.

Oettinger also said Gazprom is charging Lithuania 40 percent more than the market price for gas in Germany.

Evidence collected by the US Geological Service and Department of Energy indicates that Poland has the largest reserves of natural gas.

Romania, Lithuania, Hungary and Bulgaria also have significant unconventional gas resources.

The Lithuanian government believes its extractable shale gas reserves could be at least 10 times the 3.3 billion cubic metres of gas it imported from Russia in 2012.

That said, countries expecting a US-style economic silver bullet are likely to be disappointed.

Thousands of wells would need to be sunk just to work out the geology of the gas sites, a process which could take five years and possibly longer in some EU countries.

A paper by the Atlantic Council claims that "while unconventional gas is likely to strengthen the long-term energy security of some countries, especially in Central and Eastern Europe, the European Union as a whole will not experience the type of bounty created by additional domestic gas resources in the US."

"The US has been investing in this for 15 years, it's not just about flicking on a switch," said Lyman.

The European debate on shale gas extraction, and particularly the pros and cons of fracking, is now starting in earnest.

But nobody should be surprised if post-Cold-War political geography plays a big part in the debate.

Opinion

We need an honest debate on shale gas

The debate on shale gas is reaching hysterical proportions. It is high time to have a frank, open and honest debate that acknowledges both the merits and drawbacks of shale gas, writes Roderick Kefferpütz.

Opinion

A strategy for exploiting European shale gas resources

The EU has an opportunity to take a significant step in solving its energy problem and reaffirm its status as a major player in geopolitics. All it has to do, is embrace shale gas as part of the solution to its energy problem, advocates Dutch conservative MEP Derk Jan Eppink.

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