It’s now been more than two years since the Russian annexation of Crimea. Relations between the Kremlin and most European capitals are still strained, and EU sanctions are likely to be extended next week (21-24 June 2016). Nevertheless, Russia is one of the EU’s largest energy suppliers and, in 2013, accounted for almost 40% of EU natural gas imports.

Given the current frosty nature of EU-Russia relations, our commenter Rafael, pointed out that both parties should work to diversify their energy links. Rafael argues that the EU is already making progress diversifying its energy supplies via, for example, the Trans Adriatic Pipeline, while Russia itself has begun looking for new clients, most notably China.

Will these efforts ultimately be successful, or is geographic proximity more important? Is Rafael right to be so confident? To get a reaction, we spoke to Dr. James Henderson, Senior Research Fellow at the Oxford Institute for Energy Studies. How would he respond?

As a consumer, you would always want to have the largest variety of import options available, both to increase your security of supply and to increase your bargaining strength in any price negotiations. Similarly, as a supplier, you would never want to be reliant on sales to one region or country… Having said that, there are clear limitations to those strategies having full effect. Russia’s negotiations with China have been more difficult than Russia had hoped. The timescale for potential Russian gas exports to China is lengthy. The first pipeline is unlikely to be supplying gas before 2021, and even at that stage exports to China would be only a quarter of current exports to Europe… Similarly, from a European perspective, the Trans Adriatic Pipeline pipelines will only be bringing 10 billion cubic metres (bcm) of Azeri gas to Europe, compared to 160 bcm imports of Russian gas in 2015. This does not mean that Europe’s attempts to diversify are wasted; clearly it is important to demonstrate to any major supplier that you have alternatives. But, in reality, Europe is going to remain reliant on Russian gas for the foreseeable future, not least because Europe’s indigenous supply is in decline, and therefore the need for imports will increase. And the largest potential source of imports with available production capacity is Russia…

Next up, we had a comment from Cristina, who was very critical of the EU’s energy strategy, arguing that it is unwieldy and unable to cope with a changing political and technological landscape. Is she correct? Are the EU’s energy strategy and investment plans flexible enough to take into account emerging trends?

To get a response, we spoke to Tatiana Romanova, an associate professor of European Studies at St. Petersburg State University, whose research focuses on EU-Russia energy relations. How would she rate the EU’s current energy strategy?

Well, I think the EU’s energy planning is flexible enough because, first of all, it is designed to match the EU’s priorities: construction of the internal market; security of supply; and environmental safety, protection, and climate change. So, it’s logical that the EU designs it energy and infrastructural policy to include all these priorities. And, on top of that, we also have to keep in mind that the EU just provides a framework, and in terms of infrastructure it’s up to private companies to finally implement that. And, of course, private companies do take into consideration all sorts of factors – including economic cycle, availability of finance, demand, supply, security, and that sort of thing – when they make investment decisions. So, I do believe in the market and private companies, and although I think energy planning is good, it shouldn’t be too political…

Finally, we had a comment from Drew, who argues that energy prices are likely to stay low for the foreseeable future. If oil rises above $60 a barrel, for example, some analysts argue that US shale producers will start increasing production, dragging down prices again. Similarly, advances in Liquefied Natural Gas (LNG) mean that gas prices could remain low for some time.

If oil and gas are going to remain cheap and plentiful, does that reduce the incentive for Europe to diversify? We recently spoke to Fatih Birol, Executive Director of the International Energy Agency (IEA), and asked him if he agreed with Drew that cheap oil was here to stay:

Yes, I think US shale oil production puts a ceiling on the increase of oil prices. So, unlike in the past, as long as we have US shale oil, prices cannot go to high levels for a long time. According to our analysis, if prices rise to $60 or so, we can see US shale coming back and putting a ceiling on oil prices, and as a result we may see oil at this price for some time to come.

Can Europe break its dependence on Russian energy? Or are Russia and the EU likely to remain bound together, despite attempts to diversify their energy connections? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: CC / Flickr – antjeverena