A European Energy Executive's Delicate Dance Over Ukraine - NYTimes.com - 0 views
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A European Energy Executive’s Delicate Dance Over Ukraine
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Major Western oil companies like BP and Exxon Mobil have extensive exploration deals in Russia that they fear could be jeopardized if the United States and European Union impose stiffer sanctions on the Putin regime.
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“This is by far the toughest time for European energy security that I have seen,” said Mr. Scaroni. “This issue might stop the supply of Russian gas.”
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The goal is to be able to ship gas to Ukraine at an annual rate of more than three billion cubic meters by the time the heating season begins in the autumn, increasing the flow to up to 10 billion cubic meters annually by next spring. Last year Ukraine imported nearly 30 billion cubic meters of gas, according to a recent report by the Oxford Institute for Energy Studies.
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Part of his message is that, even though gas demand in Europe has been weak because of sluggish economies, imports from Russia actually rose last year by about 16 percent as other sources of supply including Norway and Algeria declined. Europe, he warned, is simply not prepared to do without gas from Russia.
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But with the gradual introduction of more competitive pricing in the European markets, the gas business has become much less attractive for ENI and other big gas middlemen. They are stuck with high-priced long-term contracts to a handful of suppliers like Gazprom and Sonatrach, the Algerian state-owned company, while their customers are able to secure gas at often lower spot market prices — assuming the gas is flowing.
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The pipeline would be a major new source of Russian gas for energy-hungry Europe. But European Union authorities have become deeply skeptical about the South Stream plan, seeing it as just another way of making Europe more dependent on Russian energy.
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Given the balance of interests, tighter sanctions by Western governments might more likely aim to stem the technology that Russia needs to increase its future production, rather than to cut off gas supplies to Europe,
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hose outages in 2006 and 2009 are a top reason that the European Union had already been trying to chip away at Europe’s dependence on Russia even before the Crimea annexation.
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One of the most acrimonious battles is between the bloc’s antitrust authorities and Gazprom. That standoff began in 2011 when the European Commission carried out surprise raids on natural gas companies across Europe, including Gazprom affiliates, seeking evidence of blocking access to networks, charging excessive prices and raising barriers to diversification of supplies.
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That is partly because powerful Eastern European countries like Poland argue that such clean-energy policies would impede their ability to reduce Russian dependence by mining more coal or developing their own shale gas resources.
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nd this month, the European Commission issued rules aimed at reducing the subsidies that governments use to support the wind and solar industries,