Gas geopolitics
The EU has revealed its reckless and structural energy dependence on Russia. A deficiency that Putin is exploiting at will, while Europeans finance his war. Putin has already pocketed more than 20 billion euros since the invasion of Ukraine.
A strategy that allows him to circumvent economic sanctions and advance his threats. And it is up to the EU to redraw the European energy map.
For now Putin is suffering the tactical setback of the war, and another geopolitical one, that of Finland and Sweden. On the one hand, Russian power and the effectiveness of its armaments are being questioned in the face of a Ukraine that is resisting and regaining lost ground thanks to NATO intelligence and high-precision equipment. This augurs well for a long war. On the other hand, the Finns, who have suffered several violations of their airspace by Russian aircraft, and the Swedes have just applied for NATO membership. Moldova and Georgia are considering it.
Putin has not hesitated to cut off gas to Poland and Bulgaria for not paying in roubles. Indeed, Ukraine stopped the flow of Russian gas in transit through the Sokhranivka pipeline in the Dombas. And the Kremlin has just announced on Thursday, 12 May, that it will stop using the Yamal-Europe pipeline, which is of little importance but passes through Poland, as well as cutting off gas and electricity supplies to Finland in retaliation. Earlier, on 1 April, Latvia, Lithuania and Estonia broke away from the Gazprom empire. Today they are interconnected by pipelines, relying on Norway and liquefied natural gas (LNG) as an alternative. The Gas Interconnection Poland-Lithuania (GIPL) is a new 500 km pipeline linking Lithuania and relieving a Poland already disconnected from Russia.
For its part, the European Commission has just launched the "REPowerEU" in order to reduce imports of Russian hydrocarbons. Germany is already seriously considering cutting off Russian gas by announcing the construction of two liquefied natural gas (LNG) terminals as part of an energy agreement with Qatar. Although it has already reduced oil imports from 35% to 10%, coal from 50% to 8% and gas from 55% to 3 %, it is far from a total shutdown.
For the time being, Norway and the Netherlands have increased their gas supply capacity to the maximum for Europe. And Azerbaijan has started supplying gas through the Trans Adriatic Pipeline (TAP) to Italy, Greece and Bulgaria, among others. The TAP is linked to the Trans-Caspian pipeline section, which brings natural gas from Turkmenistan and Kazakhstan, and the Trans-Adriatic pipeline. A decisive route to reduce Europe's dependence on Putin.
Another insufficient and unreliable alternative would be Algeria, which has just received Lavrov in the midst of the war with Ukraine in gratitude for its unconditional loyalty to Russia. Algeria, a country commanded by pro-Chávez and pro-Iranian military, with an exhausted political system, economically closed, socially unstable and at high security risk, is incapable of taking advantage of this crisis to escape from its self-destructive dynamic. It closes the Maghreb Europe gas pipeline (GME) out of revenge against Morocco. And it is capable of selling gas below market price in order to support its particular crusade against its neighbour.
Nor has it hesitated to revise upwards the price of gas to Spain in retaliation for the Spanish government's decision to recognise Morocco's sovereignty over its Sahara, although it will maintain it for the rest of its customers. It also threatened to cut the second pipeline, Medgaz, direct to Almería, since Spain is reusing the Maghreb Europe (GME) pipeline to send regasified gas that Morocco buys liquefied on international markets. The same fate will befall Italy with the TransMed pipeline by the time it announces its support for Morocco as the Netherlands has just done. It is currently threatening to cut off Tunisia's gas supply. And it is very likely that Tunisia will soon suffer an electricity blackout.
Spain's dependence on Algerian gas has been reduced from 45% to 25% due to the technical incapacity of the Medgaz. However, Spain has important methane infrastructures for the transport of liquefied natural gas (LNG) and liquefaction platforms that are being used to make up the difference via Qatar, the US and Nigeria. It also has important underground storage facilities. Thus, Spain could become the hub for gas extracted from Africa if the Spanish proposal for the MidCat gas pipeline between Spain and France is taken up again, together with the already activated Nigeria-Morocco gas pipeline project, promoted by King Mohammed VI in 2016.
The Trans-African megaproject has the backing of ECOWAS, OPEC and the Islamic Development Bank (IDB) and is under preliminary study by the Australian company WorleyParsons. It will be the world's longest gas pipeline, some 6,000 km. It will benefit 11 ECOWAS countries, Mauritania, Morocco and Spain, linking up with the Moroccan section of the Maghreb-Europe gas pipeline (GME). In addition, Morocco, Senegal and Mauritania have already announced abundant gas off their coasts. The Trans-African would replace all Russian gas.
Another pipeline, Eastmed, which was to link offshore natural gas fields off Israel and Cyprus with Greece and Europe, is back on the negotiating table. In turn, Israel and Egypt had already agreed in 2019 to build an offshore pipeline from the Leviathan gas field to liquefaction facilities in Egypt with a view to increasing exports to Europe.
It is time to solve the European energy dilemma that led Merkel to oppose Ukraine's NATO membership in order to build the now stalled NordStream2, despite warnings from the US and the Baltic states. Putin thereby extended his hegemony and control over Germany, while Poland, Lithuania, Latvia and Estonia had invested in energy projects far from Russia, precisely for their geopolitical security.
The EU will have to disconnect by opting for new alternative gas pipelines, for renewables, for the thermal insulation of buildings, for the rationing of hydrocarbons, for capping gas by turning the Iberian exception into a Directive, as well as, as Draghi explained, creating a buyers' cartel to gain bargaining power over sellers.
If Germany plans to disconnect in 2024 to avoid an economic crisis, such a crisis is already here, brought forward by the markets. All economic indicators have been disrupted by energy inflation. GDP is falling and public spending is rising, income distribution via salaries and the revaluation of pensions at a sky-high CPI is in disarray.
Russia and Algeria will take advantage of the winter, which is just around the corner, to increase their blackmailing coercions.
Could disconnection lower the price of gas?