March 10, 2014 | 6
The situation unfolding in Crimea is an interesting example of energy’s role in geopolitics. In Ukraine, the major energy story is consumption and transportation of Russian natural gas. 60 percent of the gas burned in Ukraine comes from Russia and gas that passes through Ukraine finds markets in Germany, France, Czech Republic, Bulgaria and others. This map from Reuters does the trick (hat tip: @costasamaras):
And the US, flush with natural gas from domestic drilling of tight shale plays, is looking to use its newfound abundance to “curb” Russia’s influence. There are a couple good takes on this issue. I recommend the reader to check out Jason Bordoff’s piece in Foreign Policy for the case for exporting US LNG (and some of the challenges).
But another important point is: the gas weapon – that is, the ability to use energy as a political tool – works both ways. Ukraine and European countries are at risk of Russia shutting off gas supplies – something it has done in the past. But Russia is also dependent on these markets for a lot of its wealth and income. James West elaborates at Mother Jones:
Russia isn’t as powerful as you might think. But for all the Russian posturing, and the canceled energy deal, Ukraine—and Europe more broadly—does have some leverage over Russia to prevent the situation from deteriorating further, says Edward Chow, an energy and security analyst at Center for Strategic and International Studies (CSIS). ”Interestingly, the gas pipelines, as well as critically important gas storage facilities, all go through Western Ukraine,” he says. “Until Russians build additional bypass pipelines…they are still highly dependent on Ukraine to transit gas exports to Europe.” And Ukraine’s supplies, mostly in the pro-reform western part of the country, could withstand a four-month Russian blockade, according to Reuters.
The situation in Ukraine is complex. In any event, US LNG is more of a medium to long-term play; the first LNG export facility is expected to up and running in 2015. A lot can happen in the meantime.