Georgia crisis puts focus on energy supply

August 31, 2008 02:30:27 PM

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The Georgian crisis is focusing EU attention on how to loosen Moscow's grip on its energy supplies but the European Union and Russia's interdependence makes a radical rethink nearly impossible, experts said.

The security of energy supplies from Russia to Europe will loom large in the background when EU leaders meet in Brussels this week to review the 27-nation bloc's relations with Moscow, strained by the crisis over Georgia.

"The conflict in Georgia will create a new climate. The Europeans will do everything to reduce their dependence," said analyst Susanne Nies at the French Institute for International Relations.

Energy flows west from Russia to the EU make up the bulk of trade between the two sides, without which their trade would be no greater than between Europe and Iceland.

While the EU depends on Russia for nearly a quarter of its gas and oil supplies, the bloc is likewise Russia's biggest market.

Moreover, Europe, a long-standing and faithful customer of Russian energy, could not be easily replaced by distant Asia, despite its booming demand, according to experts.

"It's a relationship which goes both ways. If Russia is taken to be a bad supplier, Europe will try to find other sources of energy," said analyst Simon Wardell at consultants Global Insight.

In January 2006, a gas price row between Russia and Ukraine led to a brief cut in supplies to some European countries.

That incident gave a wake-up call to the EU, which has since made the security of its energy supplies a top priority.

To that end, the EU has tried to forge ahead with a joint foreign energy policy and diversify the sources of its supplies.

The Georgian crisis has "underlined the relevance of these objectives," an official with the French presidency of the EU said Friday.

Even though Europe's energy security will not be directly addressed at the summit "work on the matter will be stepped up in the coming weeks," the official said.

However, joint energy policy remains largely theoretical because many EU countries continue to pursue their interests individually with Russia and its energy giant Gazprom.

This is particularly evident as regards the routes of strategically important gas pipelines from Russia.

Gazprom has signed a deal with Italian group ENI to lay a gas pipeline beneath the Black Sea running from Russia to southern Europe, in direct competition with a pan-European pipeline called Nabucco detouring Russia.

In another sign of the EU's lack of unity, Russia and Germany are building a pipeline known as Nord Stream between the countries, passing beneath the Baltic Sea and thus skirting central Europe.

While cutting gas supplies to Poland and the Baltic countries currently would affect other EU countries, that would be less the case with Nord Stream.

However, the already controversial project "has become practically impossible" since the Georgian crisis broke out, according to Nies.

Poland and the Baltic countries, which had held up the launch of EU-Russia negotiations on a new partnership pact this spring, repeatedly stressed in recent weeks that Moscow could not be trusted.