Power games

Russia has long held a trump card when it comes to negotiating with Europe: our dependence on its gas.

But with opposition to President Putin’s support for the separatists suspected of bringing down flight MH17 apparently hardening, world leaders might be poised to take action that could have significant short and longer term effects on Europe’s and the UK’s energy landscape.

With a number of nations arguing for tougher sanctions on Moscow, there are growing fears across Europe that Putin could retaliate by shutting off gas supplies. What’s more, the tough “tier 3” sanctions being proposed by the likes of UK could also have a major impact on energy supply from the region, by blocking access to European markets for entire sectors – such as gas and oil.

So what could this mean, and how much do we actually depend on Russian gas?

Europe currently gets around 30 per cent of its gas from Russia, but some countries are more dependent than others: the Czech Republic and Finland, for example, import at least 80 per cent of their gas from the country, whilst Germany, which has been treading particularly carefully in its dealings with Putin, imports around 36 per cent of its natural gas and 39 per cent of its oil from Russian energy suppliers.

The situation in the UK is less clear. UK gas imports account for around 70 per cent of supply, but because of the complex European network of pipelines and inter-connectors that we rely on it’s difficult to say exactly how much of our gas originates from Russia. Some reports claim that Russia supplies around 15 per cent of UK’s gas and others that this figure is much lower. Russian energy giant Gazprom estimates that it sends 11 billion – 12 billion cubic metres to Britain each year .

Whatever the figure, the knock-on effect of any Russian gas shut down will be felt as keenly here as in many other parts of Europe. The current crisis may also impact a deal made between Centrica (which owns British Gas) and Gazprom to begin importing 2.4bn cubic metres of Russian gas via a pipeline from Holland in just a couple of months time.

It’s hard to predict what will happen next. If investigations into the attack on MH17 establish a clear link with Russian Separatists - and president Putin continues to support them – then the crisis is likely to have a rapid and fundamental impact on Europe’s energy landscape. On the other hand, if the investigations are inconclusive and Putin (who is currently basking in record domestic approval ratings) continues to tough it out, gas supplies might remain uninterrupted, for now.

But whatever happens, the current situation is a striking reminder of why security and independence should be key priorities for the UK’s energy supply, and should serve as a wake-up call to boost investment in technology - from renewables to nuclear energy - that enables us to achieve this.

The current crisis is also likely to increase the volume of the discussion around using hydraulic fracturing (fracking) to access the UK’s on-shore shale gas reserves, which many believe could provide us with a source of plentiful of cheap energy for many years.