Thursday, 2 July 2009


News that Gazprom (the Kremlin controlled Gas company and an effective arm of the Russian State) has signed a big new natural gas deal with Azerbaijan, may seem of little importance as we in the UK temporarily swelter in hot weather. What it does though is strike a severe blow to European efforts to reduce energy dependence on Russia (and Russian controlled Gas supplies).

The news that Moscow will buy 500 million cubic metres of gas annually from next year is not good news from a Western European perspective and should be a spur to developing alternative sustainable energy supplies. At the moment Europe gets around 20% of its gas supplies from Russia via pipelines that cross the Ukraine, through last winter a series of increasingly bitter rows between Kiev and Moscow saw supplies being cut or reduced.

The fact that Gazprom chief executive Alexei Miller was more than happy to say that that the firm had also been promised priority in buying gas from the second phase of the Shakh Deniz Caspian Sea field, is not good news for the rest of Europe. The Shakh Deniz Caspian Sea field has been seen as a potential key source of gas for the EU-backed Nabucco pipeline, which is free from Russian control.

Back in the spring, Vladimir Putin's decision to reduce further gas exported into Ukraine, through which 80 per cent of Russian gas exports to the EU flows, should have highlighted the real dangers of relying on imported energy. While Russia has declining cash reserves and its economy is heavily reliant on its trade in gas – the risk of shortages as a consequence of Mr Putin's geopolitical games is something we can truly all do without.

While other countries have insured themselves against external shocks to their energy needs; the UK’s market driven approach has been entirely inadequate. France can store 122 days of gas and Germany 99. Yet the UK has storage capacity to last only 15 days (there is a quiet but frantic effort to change this); the New Labour Government took almost a decade to recognise the need to increase storage capacity. The consequence is that UK sells gas during the summer because we cannot store it but UK energy suppliers struggle to purchase gas again when it is needed in the winter.

The complicit greed driven insanity of the Conservatives headlong dash to gas in the 1980’s has been compounded by a real failure in basic strategic energy planning and made worse by the Government's perverse decision to half-hearted look at developing diverse reliable alternative energy sources. This New Labour Government has ignored repeated warnings that it was setting the UK on a path towards higher prices and blackouts.

Over the next six years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be closed, with nothing ready to replace them. We are now in the situation where we are now even more dependent upon imported gas from either unstable regions or dubious suppliers and we the customers face unnecessarily expensive bills.

As a matter of urgency the Westminster Government, the Scottish Parliament, the National Assembly and the Northern Ireland Assembly should work with the Irish Government to make these islands entirely self sufficient via renewable non market driven energy resources. By developing a flexible self-sufficient energy development strategy that encourages decentralised microgeneration schemes and by actually implementing it this could create jobs, useful skills and help to bootstrap the economy out of the developing recession as well as helping consumers.

In the meantime, lets all hope we have a mild winter...

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