Belarus-Russia Gas Dispute Highlights Need For Energy Independence
In what turned out to be a near week-long crisis, the major dispute over gas between Belarus and Russia has come to an end.
Under the threat of cutting off gas supplies last Thursday, the state-run Gazprom, flexed its monopolistic stronghold on European gas when Russian President Dmitry Medvedev ordered Belarus to pay off a $200 million gas debt by week’s end owed to Russia for gas increases throughout 2009.
Mostly as a protest to these increases, but also in part due to strained relations between the two countries, Belarus refused to pay the debt saying it was prepared to give up control of its Beltransgaz pipeline and an oil refinery in exchange for the right to pay domestic Russian prices for oil and gas.
By Saturday, talks between the two countries were at an impasse, leading Russia to declare a reduction of gas exports to Belarus by 15 per cent if the debt wasn’t settled.
By Monday, that threat was a reality. Following an order from President Medvedev, Gazprom began gradually reducing gas supplies to Belarus. Belarus, for their part, said the debt would be paid in full within a two-week period and once again offered their pipeline and oil refinery, but Russian officials said they were more interested in cold hard cash rather than a barter of “pies or pancakes, cheese or butter.”
Tuesday, Gazprom Chief Executive Officer Alexei Miller said the Russian gas giant would further reduce its supplies to Belarus, totaling a 30 per cent cut.
The move was enough for Belarusian president Aleksander Lukashenko, who halted all transit of Russian gas to Europe via Belarus, which accounts for nearly one fifth of Russian gas exports abroad.
Belarus’s First Deputy Energy Minister Eduard Tovpinets said this halt was also due in part to an outstanding $200 million debt on Russia’s behalf for transit fees for deliveries to Europe. The Russian response was another cut in supplies, cutting deliveries by 60 per cent this time.
By Wednesday, EU Energy Commissioner Gunther Oettinger said countries throughout Europe were beginning to feel the effects of the gas war, pointing out that Lithuania had only received half its daily gas deliveries. That afternoon, Belarus said it had paid its debt to Gazprom, but demanded Russia pay up for the gas transit fees.
The crisis came to an end today when Russia made that payment, Belarus lifted the ban against Gazprom gas transport and the Russian gas monopoly announced the full restoration of gas supplies to Belarus.
The whole debacle solidified the importance of energy independence, not only in Europe but also in North America. Reducing the need for outside energy sources – such as crude oil imports in the United States – helps countries avoid external conflicts and ensures a higher degree of energy security.
With the US seeing a huge boom in unconventional resources like shale gas over the past few years, that independence could fast become a reality. The same analysts that are predicting shale gas could greatly reduce European dependence on Russian natural gas also predict that shale gas could drastically increase the US’s gas reserves, potentially leading to their independence.
Estimates say that shale gas represents 100 years of energy supply in the US alone at current consumption rates.
A 2009 New York Times article called shale “the biggest energy innovation of the decade” and just last month the Globe and Mail called shale gas “the next energy game changer.”
SOURCE:
Natural Gas For Europe