How gas has become a geostrategic currency of exchange in the energy crisis


Nord Stream 2 at the heart of the European energy crisis (REUTERS)

People who live in Beirut, Paris or London share the same fear of the cold winter to come, as the gas that heats or lights their homes is either missing or too expensive.

Many drivers explain the energy crisis. One could be high demand versus low supply due to an earlier than expected economic recovery after the fallout from Covid-19. The new push backed by the Chinese government in the fight against climate change is another. And, of course, the decades of political corruption and incompetence, as the disaster in Lebanon demonstrates.

One thing that Europeans and Lebanese alike keep their eyes on in hopes of an exit: pipeline diplomacy. Analysts say Russian Vladimir Putin sees a window of opportunity to exploit the disparity between supply and demand and its geopolitical unpredictability.

The crisis has established, in practical terms, how natural gas could be deployed as a geopolitical weapon, but which has a unique peculiarity: inefficient, ugly, and the risk that it could backfire.

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UK fuel prices hit an eight-year high as the oil crisis continues (EPA)

“Gas as a geopolitical weapon only works in a very asymmetric trading relationship, where one side clearly has the upper hand. This has probably never been the case in EU-Russia gas relations. Europe is a major customer and Russia did not have many export options elsewhere, ”said Professor Andreas Goldthau, Franz Haniel Chair of Public Policy at the University of Erfurt.

While geopolitical issues did not originally spark the energy storm, a diplomatic palliative could provide a hiding place for its drastic consequences.

During the 2009 price dispute with Ukraine, Russian gas giant Gazprom cut off all supplies to Europe, hitting its southeastern countries and other parts of the EU. Following the 2014 crisis linked to the annexation of Crimea, Russia again turned off the taps while accusing Ukraine of not paying its debts to Gazprom.

Russia has a habit of using energy supply as a way to buy friends and divide and rule with EU customers

Andreas Goldthau, Franz Haniel Chair of Public Policy at the University of Erfurt

“Russia has traditionally used energy supply and pricing as a way to buy friends and divide and conquer with individual EU customers. Now that a strong and common European energy policy regime is in place, this has become very difficult, ”explained Goldthau.

“If Russia is using its gas exports as a political weapon, it’s not very effective,” said Maria Pastukhova, senior policy adviser at E3G, an independent climate change think tank.

In 2007, the EU proposed the third reform of the energy package, which aimed to improve the functioning of the EU’s internal energy market. The policy, which came into effect in 2009, the same year that Moscow tightened energy screws, aimed at integrating the EU’s energy market to boost competition.

Since then, tensions over Russian gas have ruled out any discussion of a thaw between the two sides.

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The energy crisis has created long lines at gas stations (AFP via Getty Images)

“The alienation between Russia and the EU has only worsened as the EU introduced additional measures to tighten gas market regulations and the adoption of a Green Deal vision that would effectively reduce gas imports by 40% over the next ten years and over 90%. one hundred by 2050, ”she added.

But it will take some time to get real results. Today, Europe still imports 90% of its gas. Russia provides about 40 percent of its total.

Meanwhile, in the UK, where several energy companies have collapsed due to soaring prices, 80% of homes are heated with gas. Storage capacity in the UK currently equates to around four to five days of gas demand in winter, according to Reuters, up from 15 days previously.

Last week, Putin announced that Moscow was ready to increase its supplies to Europe and offset the crisis. But Gazprom’s decision to pump gas into Russia’s national reserves may have flaunted a sense of Putin’s unique psychological games with European leaders.

“While Gazprom has repeatedly stated – in May and August 2021 – that it will export 183 bcm of gas to Europe in 2021 and adhered to that forecast, Europe apparently expected more from Russia and has was surprised when Gazprom decided to prioritize filling its own storage in Russia rather than offering additional gas to Europe, ”said Katja Yafimava, senior researcher at the Oxford Institute for Energy Studies.

Russia’s message on Nord Stream 2 pipeline is a poorly planned attempt to use rising gas prices to benefit Gazprom and the Kremlin

Maria Pastukhova, Senior Policy Advisor at E3G

However, critics accuse the Kremlin of artificially keeping supply at lower levels to raise gas prices and put pressure on European and German officials to activate the controversial Nord Stream 2 pipeline operations.

Russian officials have publicly stated that “the rapid completion of certification” for Nord Stream 2 would help “calm the current situation”.

“The Kremlin’s message regarding the need to speed up certification of the Nord Stream 2 pipeline is a rather ill-planned attempt to use rising gas prices to benefit Gazprom and the Kremlin,” Pastukhova said. The independent.

“This neither changes the general position of the EU towards Russia (if it does so at worst then) nor helps to maintain Gazprom’s image as a reliable supplier,” she observed.

Experts say that in addition to liquefied natural gas from Qatar, Europe’s other alternative would be the recent massive gas discoveries in the eastern Mediterranean. But the region, despite its proximity to the besieged continent, is riddled with conflict, competition and historic feuds, featuring countries like Egypt, Israel, Lebanon and Turkey.

Over the past decade, geostrategic competition over gas discoveries has created a regional system built on a mutual tit-for-tat response, where Egypt’s frustrations at Turkey’s stunts in Libya could translate into the formation of alliances to block Turkey’s gas excavations in the Mediterranean.

Other obstacles poised to become a viable solution for Europe’s over-reliance on Russia are expensive connectivity, technical risks and high domestic demand.

“East Med’s gas supplies will primarily serve the domestic markets of Israel, Egypt and the wider region. In addition, Turkey has its skin in the game and will probably hamper a rapid development of gas fields in the territory of Cyprus, ”said Goldthau.

A convoy of tankers carrying Iranian diesel crossed the border from Syria to Lebanon, (AP)

A convoy of tankers carrying Iranian diesel crossed the border from Syria to Lebanon, (AP)

But disputed eastern Mediterranean gas supplies could prove to be a lifeline for Lebanon, where the energy crisis has caused complete blackouts amid a severe economic crisis.

The Lebanese energy crisis has brought former enemies together in a way that could create a new regional dynamic.

This month, officials in the region announced they had finalized a plan that could give hope to millions of Lebanese citizens suffering in the heat of the crisis.

According to the plan, backed by the United States, Egypt will supply gas to Lebanese power plants through a pipeline that crosses Jordan and Syria. Jordan will also export electricity, which is mainly produced by gas imported from Israel.

But Lebanon’s problem lies in its use of old diesel-powered power plants, underscoring its imminent need for fuel oil rather than natural gas.

“Anyone can guess if Lebanon will abandon diesel-based power generation and switch to a more modern system. Gas would be a big improvement because it’s much cleaner and cheaper, ”said Jim Krane, Middle East energy analyst at the Baker Institute at Rice University. The independent.

Iran and Hezbollah’s grip won’t be weakened by gas – it’s much more entrenched and complex

Steven Wright, Associate Professor at Hamad bin Khalifa University in Qatar

Since September, two Iranian tankers have docked in the Syrian port of Baniyas. Fuel was trucked to Lebanon’s borders, in a move that Iran-backed Hezbollah described as a major victory against US sanctions on Iranian oil exports.

The United States is counting on the new plan to thwart Iran’s dominance in Lebanon and Syria and introduce a solution sanctioned by its Arab allies.

But the controversial arrangement could see Israel’s gas and electricity light up the headquarters of its nemesis Hezbollah and provide bloody Syrian dictator Bashar al-Assad a way out of international isolation.

Nonetheless, using the gas supply to dismantle decades of Iranian influence in the region could prove that the Biden administration’s plan is illusory.

“The grip of Iran and Hezbollah will not be weakened by the gas – it is much more entrenched and complex and will not be fading anytime soon,” said Steven Wright, associate professor at Hamad bin University. Khalifa in Qatar.

And, despite his supposedly swift approval of the plan, Assad’s ambitions to be rehabilitated by being given a greater role in resolving the Lebanese crisis may soon fail.

“This plan will not be enough to redeem Assad in the eyes of the international community. After all, Syria has been the main actor in creating instability in Lebanon, primarily through Hezbollah, which is a surrogate for Syria and Iran. At best, we’ll see the pragmatism used with Syria, but redemption is not on the agenda, ”Wright noted.

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