© 2021 KMUW
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Europe is moving away from fossil fuels, after being dependent on Russia for decades

AILSA CHANG, HOST:

Natural gas prices in Europe are coming down after Russia started supplying more this week. That is welcome relief for Europeans after a year that has seen prices double or at times even triple as Russia slowed down gas deliveries. Amid the market turmoil, some analysts see evidence that Europe has become too dependent on Russia, its biggest gas provider. From Moscow, NPR's Charles Maynes has more.

CHARLES MAYNES, BYLINE: Amid all the recriminations between Russia and Europe over the current price of gas imports, Georgetown University professor Thane Gustafson offers this bit of advice.

THANE GUSTAFSON: This story really illustrates the importance of taking the long view.

MAYNES: A historian of Russian energy, Gustafson says to understand Kremlin gas politics, you need to dial back the clock to the late 1960s and early '70s with the discovery of massive oil and gas fields in Western Siberia...

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON #1: (Non-English language spoken).

MAYNES: ...that Soviet propagandists called the sensation of the 20th century.

GUSTAFSON: Suddenly, the Soviet Union has the prospect of gas to export. But they don't have the finance, and they don't have the capability to build the pipelines.

(SOUNDBITE OF TV SHOW, "NBC NIGHTLY NEWS")

JOHN CHANCELLOR: The oil-producing countries of the Arab world decided to use their oil as a political weapon.

MAYNES: At the time, Europe's own energy supplies looked in doubt from threats of an energy embargo and the oil-producing bloc of nations known as OPEC. So Europe and the Soviets strike a deal - the West will build the pipelines, the Soviets will provide the gas.

GUSTAFSON: Faced with the prospect of the OPEC embargo, Soviet gas looks like a godsend.

MAYNES: And so begins the strange, decades-long partnership between communist Russia and capitalist Europe. Through ensuing political thaws, flare-ups and even the end of the USSR, business kept going, and the gas kept flowing.

GUSTAFSON: When you've got a pipeline, you've got a relationship, whether you like it or not.

MAYNES: Which brings us to today and President Vladimir Putin's Russia and the state-owned company that inherited that relationship - Gazprom.

(SOUNDBITE OF VIDEO, "ABOUT GAZPROM")

UNIDENTIFIED PERSON #2: Gazprom is the largest natural gas recovery and delivery company.

MAYNES: Today, the company boasts a network of new pipelines that have only cemented those energy ties. Russia currently provides more than one-third of all European gas, prompting accusations Europe has left itself open to Russian manipulation.

MIKHAIL KRUTIKHIN: Many countries in the east of Europe are critically dependent on Russian supply.

MAYNES: Mikhail Krutikhin of RusEnergy consulting in Moscow is among Gazprom's detractors. He says, look at neighboring Ukraine. The country was once a critical artery for Russian gas exports to Europe, only Gazprom has invested millions to reroute gas around the country since Ukraine's politics moved towards the EU in 2004.

KRUTIKHIN: That was a political goal - punishing Ukraine because it was not behaving as a satellite of Russia would behave.

MAYNES: Now, Russia's completed a pipeline bypassing Ukraine, this time direct to Germany; a project called Nord Stream 2. Krutikhin says Gazprom is holding natural gas back for now in a bid to secure regulatory approval for the pipeline and long-term contracts from Europe.

KRUTIKHIN: Gazprom wants to demonstrate to the Europeans whom they depend on and to demand special treatment for Gazprom. So this is blackmail.

MAYNES: Sergey Pikin, of the Energy Development Fund in Moscow, takes a more generous view. He says in the current energy crisis, yes, politics sometimes get in the way, but Gazprom is driven by basic market incentives and the quest for long-term profits. That includes the latest surge in prices.

SERGEY PIKIN: (Through interpreter) Could Gazprom produce more? It could. But why? In a situation where you provide gas to a deficit market, what happens? The price falls. What supplier would produce more with the full guarantee that the price will go down?

MAYNES: What no one disputes - Gazprom also has to contend with Russian domestic demand. Seventy percent of Gazprom's gas flows to Russian homes. And even with gas at steep discounts, Russians can be tough customers, too.

(SOUNDBITE OF SONG, "APPEAL TO THE SHAREHOLDERS OF JSC GAZPROM")

SEMYON SLEPAKOV: (Singing in non-English language).

MAYNES: This song, by the comedian Semyon Slepakov from 2012, lampoons the profits reached by Gazprom as average Russians are left literally footing the bill.

(SOUNDBITE OF SONG, "APPEAL TO THE SHAREHOLDERS OF JSC GAZPROM")

SLEPAKOV: (Non-English language spoken).

(LAUGHTER)

MAYNES: The gas belongs to all of us, sings Slepakov, so why is it only your dreams come true? And that highlights another controversy - a history of mixed pricing, with Gazprom doling out favorable contracts to Russia's friends while raising prices on would-be adversaries like Ukraine or tiny Moldova, another former Soviet republic whose new pro-Western government was recently forced to declare a state of emergency after it couldn't meet Gazprom's terms.

The two sides eventually reached a deal. But Marcel Salikhov, of the Institute for Energy and Finance in Moscow, says against this backdrop, Europe's own gas woes haven't been helped by a raft of Western sanctions levied against Russia in recent years.

MARCEL SALIKHOV: If you are friends, if you are in good relations, you can ask for help. But if you are kind of on a formal relations - like Gazprom says, we have obligations. We have contracts. We don't have obligations to supply more. Sorry, guys.

MAYNES: The give and take was on display during recent comments by President Putin about the energy crisis.

(SOUNDBITE OF ARCHIVED RECORDING)

VLADIMIR PUTIN: (Speaking Russian).

MAYNES: The Russian leader made a clear link between approval of Nord Stream 2 and lower gas prices for Europe.

(SOUNDBITE OF ARCHIVED RECORDING)

PUTIN: (Through interpreter) If German regulators approve delivery, we'll begin pumping gas the next day.

MAYNES: It's part of a trend of Putin placing himself at the center of Russian economic life, says Salikhov. It's also part of the problem. The more Putin gets involved in Gazprom, the more he drives the gas-as-political-weapon narrative.

SALIKHOV: He's not a CEO of Gazprom. He's not on the board. Like, but here, he has some views on the way Gazprom should do business. And it would be better not to.

MAYNES: In fact, the historian Gustafson says too much interference by today's Kremlin is in danger of upsetting the delicate gas relationship fine-tuned between the Soviets and Europeans all those years ago. The Cold War may be over, but now Europeans are trying to wean themselves off fossil fuels and transition towards green energy. Gustafson says Kremlin actions, real or perceived, that feed the image of Russia as energy boogeyman risk tipping the scales.

GUSTAFSON: What if the Russians have completed this immense industrial project to create a whole new generation of gas supply by pipeline to Europe just as Europe swears off natural gas?

MAYNES: But that's the next chapter in the long story of Europe's energy history, predicts Gustafson. Until that day comes, Russia and its Gazprom will be heating homes and seemingly angering everyone in its wake.

Charles Maynes, NPR News, Moscow.

(SOUNDBITE OF ROBERT GLASPER'S "RECKONER") Transcript provided by NPR, Copyright NPR.