By ANNA SHIRYAEVSKAYA and JONES HAYDEN
The European Union and the US confirmed plans to collaborate
on diversifying energy supplies to Europe and Ukraine while
continuing cooperation with Russia.
The EU-US Energy Council met Wednesday in Brussels to discuss
reinforcing energy security in Europe after Russia, which
meets a third of the regions gas needs, absorbed
Ukraines Crimea Peninsula, sparking the worst tensions
since the Cold War.
The council encouraged Europe
to further diversify its
supply routes, increase energy efficiency, complete an
integrated energy market and welcome the prospects of US
liquefied natural gas (LNG), the EU said in a statement.
The EU and the US recognized that our energy security
concerns and those of our friends and partners pose common
challenges, and are considering new collaborative efforts to
address these challenges, the EU said.
The EUs overall energy dependency rate is set to rise
to 80% by 2035 from the current 60%, according to the
International Energy Agency. The 28-nation blocs heads
of state and government at a summit last month asked the Europe
an Commission, the EU
executive, to prepare by June a road map on how to cut
reliance on Russian imports and increase security of
US President Barack Obama pitched US LNG exports, which are
expected later this decade following a boom in extracting gas
from shale formations, in Brussels on March 26.
The council, led by EU foreign policy
chief Catherine Ashton, US
Secretary of State John Kerry and EU Commissioner for Energy
Guenther Oettinger, agreed that energy relations with
Russia must be based on reciprocity, transparency, fairness,
non-discrimination, openness to competition and continued
cooperation to ensure a level playing field for the safe and
secure supply of energy, according to the statement.
Among the measures to cut external energy dependency, the
council also outlined smart grids, integration
of renewable energy in
the network and increased production of domestic energy
resources. Developing interconnectors will put an end
to any isolation of member states from European gas and
electricity networks by 2015, it said.
The council also urged timely construction
of the so-called
Southern Gas Corridor, a pipeline network for deliveries from
the Caspian region and Iraq, and agreed to explore
investments to strengthen supplies to central and southeast
has options to cut reliance
on the Russian fuel, the efforts may take as many as five
years and as much as $215 billion in investments, while
additional costs for higher-priced energy are estimated at
about $40 billion, Sanford C. Bernstein said today in an
The US and EU are seeking to support Ukraines efforts
to diversify its supplies of gas through rapid
enhancement of reverse flow capacities, increased gas storage
capacity and decisive measures recently announced with the
IMF to build a competitive energy economy, according to
Ukraine, dependent on Russian gas for about half of its
supplies, is exploring options to import gas from Slovakia,
Hungary and Poland by using the pipelines in reverse mode.
The country could import as much as 19.2 billion cubic meters
of gas annually from those countries, Ukraine energy minister
Yuri Prodan said March 25. Thats 74% of what the nation
imported from Russia last year, OAO Gazprom data show.
For physical reverse flows, additional equipment and
infrastructure is needed, which may take from six months to
as long as a year to put in place, the EU official said.
Reverse flows can also be virtual, meaning the gas
thats destined to go West is resold back to a consumer
further East, in this case Ukraine, before it actually moves
westward, the official said.
There is a lot of interest from many international
players on developing further supplies to Ukraine, the
official said, without elaborating.
Ukraines plans to build an LNG terminal remain on
the table, Prime Minister Arseniy Yatsenyuk said
Wednesday in Kiev. The country also plans to cut gas demand,
The EU will send a team to Ukraine to assess the
nations gas storage capacity, an EU official told
reporters. Ukraine has used stored gas over the past months
to save money, which means inventories will be reduced this
winter, the official said.
Ukraine has a very low 7.2 billion cubic meters
of gas in underground storage, Andriy Kobolyev, CEO of
state-owned NAK Naftogaz Ukrainy, told reporters in Kiev.
Gazprom, Russias pipeline gas export monopoly, recently
raised prices for Ukraine by 44% to end a price discount, as
the country owes more than $1.7 billion for past supplies.