by Neville Teller
Russia’s invasion of Ukraine has resulted in unprecedented unity of action by the Western world. Acting in concert, the West has imposed the heaviest sanctions yet on Russia and its leaders. The country has been isolated across a wide variety of fields from banking to sport, from the use of air space to the transmission of television shows. There seems complete unanimity in the West – every possible obstacle will be put in the way of Putin’s ill-advised adventurism. He must not be allowed to succeed.
One anomaly in this consensus sticks out like a sore thumb. At the moment Europe is continuing to purchase Russian oil and gas in vast quantities, and Russia is continuing to receive hundreds of millions of dollars every day from European nations. This reflects the fact that around 40 percent of Europe’s energy needs are imported from Russia. The EU is determined to reduce its dependency, and on March 8 the European Commission published plans to cut EU demand for Russian gas by two-thirds and make Europe “independent from Russian fossil fuels well before 2030”.
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On the same day, the US and the UK both announced that they would ban Russian oil imports in an attempt to increase the financial pressure on the Kremlin. US President Joe Biden signed an executive order blocking US imports of Russian oil, natural gas and coal, while UK Business minister Kwasi Kwarteng said Britain would “phase out” imports of Russian oil by the end of 2022 and was “exploring options” to end Russian gas imports.
In the short term, the soaring price of fossil fuels makes trade even more profitable for Russia than before the crisis. At the same time, the situation gives Russian President Vladimir Putin a vital political bargaining chip. He can hold the threat of slowing or cutting off supplies of oil and gas altogether over the EU’s head, and in certain eventualities, he might consider doing so.
Germany, the European country most heavily dependent on Russian fuel supplies, is taking urgent action. On February 27 Chancellor Olaf Scholz announced plans to build two liquefied natural gas (LNG) terminals, in order to diversify supply. Natural gas is being recognized as a “transitional fuel”, an interim lower carbon source of energy for use while the world struggles to reach the optimistic targets it has set itself for reducing carbon emissions from fossil fuels.
Europe’s LNG imports hit a record high in January. Nearly half came from the United States, second only to Russia in its reserves, but there are other potential sources of LNG, including the Middle East in general, and perhaps Israel in particular.
All the same, some hard facts need to be taken into account. The reserves of natural gas recently discovered off the coast of Israel and beyond, huge as they are, dwindle insignificance when compared with those held by Russia. For example, Israel’s two primary natural gas fields off the western shore of the country are Tamar and Leviathan. Tamar contains approximately 10.8 trillion cubic feet of natural gas, and Leviathan, 22 trillion cubic feet. Russia holds a total proved resource of 1,341 trillion cubic feet. Israel and its partners Greece, Cyprus, and Italy, and even its potential partner Turkey, could only ever supplement, never satisfy, Europe’s enormous appetite for energy – and that assumes establishing effective distribution methods.
The EastMed pipeline, meant to transfer natural gas from Israeli waters to Europe via Greece and Cyprus, was announced in 2016, and several agreements have been signed between the three countries on the subject. The three states aimed to complete the €6 billion project by 2025, but no financing had been secured for it. Progress came to a shuddering halt in January, when the Biden administration withdrew US support for the project.
No formal explanation for the change of policy was provided, but in a TV documentary Amos Hochstein, then a senior State Department energy adviser said: “Why would we build a fossil fuel pipeline between the EastMed and Europe when our entire policy is to support new technology?… This project probably will not happen because it’s too complicated, too expensive, and too late in the arch of history.”
Biden’s decision may have been influenced by a parallel, and extremely ambitious scheme, which has indeed received EU financing to the tune of $732 million – the EuroAsia interconnector, a project designed to connect the electricity networks of Cyprus and Greece as the first step in linking the power grids of Israel, Cyprus, Greece, and Europe. A 1,208 km undersea cable will create an “energy highway” ensuring a secure supply of electricity from Cypriot and Israeli gas reserves as well as from renewable energy sources. Construction is planned to begin this year, to be completed by the end of 2025, and to be commissioned in the first half of 2026.
When British Prime Minister Harold Macmillan was asked what was most likely to blow governments off course, he replied: “Events, dear boy, events”. The event that has rendered the thinking of only a couple of months back obsolescent.is Putin’s full-scale invasion of Ukraine. Now all options aimed at radically reducing Europe’s dependence on Russian energy are back on the table. Turkey, which has never supported the EastMed project because of Greece’s involvement, is nevertheless keen on an LNG pipeline running through Turkey to Europe. On February 25 former energy minister Dr. Yuval Steinitz, a prime mover of the EastMed project in 2017, tweeted that the government should now give top priority to the rapid promotion of its construction. Nor are pipelines the sole method of distributing LNG. Seaborne cargoes are creating a global market, similar to oil. In 2019, alongside pipeline flows from Norway, the UK, and the EU imported almost 20 percent of its gas through LNG shipments. Israeli LNG could also find its way to European and UK markets via giant tankers.
One way or another, there is pressure for the LNG bonanza that unexpectedly came Israel’s way a decade or so ago to come to the aid of Europe in its hour of need.