< SWITCH ME >

Monday, 12 November 2012 13:09

In Pursuit of Shale Gas

There is a slow evolution in Central and Eastern European energy supply and Poland is pushing hardest to ensure that shale gas is at its centre. Rather than pursuing a policy solely of energy independence from Russia though, the pursuit of shale is also part of a broader move to cope with European Union environmental policy.

The extraction of shale gas, still a relatively controversial process that involves injecting pressurised liquid deep into ground rock is a new method in Europe. It is rapidly becoming the next capital investment for countries in the East though, who are desperately seeking to reform outdated, coal based and import reliant energy sectors. By exerting pressure within the European Union, Poland is slowly establishing the necessary conditions to use shale gas to promote growth within the constraints of the EU's climate targets.

Loosening Russia's noose

Russia's influence over much of Europe's energy is hardly disputed. In 2009, during a 22-day dispute between Ukraine and Russia, Gazprom, the Russian owned gas supplier, managed to cut supply to 18 European states. As well as wiping out Ukraine's supply, supply to Bulgaria and Moldova dropped by 100 per cent; Poland by a third, and Germany by 10 per cent, with Slovakia declaring a state of emergency as supply through the Ukrainian pipeline faltered.

The establishment of the Nord Stream pipeline, a gas link that runs directly from Russia to Germany, may have quelled fears in Berlin of any future shortages, but has heightened pressure on those transit countries cut out of the loop. Gazprom's ability to squeeze or halt supplies to Ukraine and Poland in particular, without angering its western customers, has given Russia the strongest economic leverage to use on Eastern Europe since the fall of the Berlin Wall.

Published in The Transnationalist
Monday, 09 January 2012 06:09

EU pursuing Iran sanctions

European leaders have agreed to go forward with a new round of unilateral sanctions, in which the EU would ban oil imports from Iran. Instead of actually imposing these sanctions however, the EU should threaten to impose them, using them as a "stick" to bring about negotiations over Iran's nuclear programme.

In the French daily Le Figaro, French foreign minister Allain Juppé announced the result of the latest EU deliberations over sanctions against Iran: "On 30 January," he said, "the Europeans will hopefully decide on an oil embargo." The debate about banning oil imports from Iran is not new, in fact it emerged as soon as it was clear that the initial sanctions imposed vis-à-vis Iran were rather toothless. The new sanctions were discussed after the latest IAEA report contained stronger-than-usual language about the programme, accusing Iran of having had a nuclear weapons programme until at least 2003, and carrying out experiments more recently. A European oil embargo is likely to hit Iran's economy hard, as European states are second only to China in importing crude oil from Iran. Greece, Italy and Spain, are arguably the three hardest-hit states in the sovereign debt crisis and are also the biggest importers of Iranian oil. Implementing the ban would hit these states the hardest.

Greece, Italy, and Spain are the hardest-hit states in the sovereign debt crisis; they also import Iranian oil. The ban would hit these states the hardest.

Publicly Iran states that this decision will not have a severe impact on its economy. Yet it comes at a time of heightened tensions, after a US spy drone crashed or was brought down by Iranian forces who later launched repeated and highly visible manoeuvres in the Persian Gulf. Therefore, when the 1st Iranian Vice President Reza Rahimi threatened to close the Strait of Hormuz, the narrowest point in the Persian Gulf, many observers immediately feared a further escalation, with an oil price uptick of more than 2%. However, it is unclear whether Iran would actually be capable of or even willing to close the Strait for a significant amount of time. Whereas technically, it would not be very hard for Iran to do so, holding it would be considerably harder, especially with the United States threatening retaliation. Apart from a potential military escalation with the United States, the move would be suicidal for Iran's economy. Not only 35% of the global seaborne shipments of oil pass through the strait, but the Iranian government gets 60% of its revenue from oil exports, which have to pass the strait as well.

Published in Beyond Europe
NEXT ISSUE
IN -969 DAYS