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You're reading: Liubov Akulenko and Dmytro Naumenko: A Russian gambit for the EU

One alternative to Russian
oil

is from Saudi Arabia in the nearest 2-5 years, or from Iraq, Libya and the U.S.
in the nearest 5 years or more. If the West arranges for oil deliveries from
Saudi Arabia, it could drop the price on world markets to $80, which will cause
a major decline in Russia’s economy, whose growth projections for 2014 were
based on an oil price of US $100-110.

As to Russian natural gas, the only competitor in the
short term is shale gas from the U.S., although even if we could assume that
deliveries to Europe would start tomorrow – realistically we’re looking at 2015
– they will still only cover about 32 percent of European demand: the EU consumes
135 billion cubic meters of Russian gas annually, while the U.S. will be able
to start delivering only 44 billion cubic meters in 2015. According to our
calculations, it will cost no more than $400 per 1,000 cubic meters. In some EU
countries, this will make it cheaper than Russian gas. From 2016 on, American
deliveries of gas could double. By 2030, deliveries of American shale gas on
global markets could be up to 150 billion cubic meters and completely cover the
necessary volumes currently coming from Russia. The two alternatives described
here are completely realistic, although they will only have a real impact over
the next five years.

What can Europe do today? If EU countries make the
political decision to cut back on their consumption of Russian oil and gas,
taking advantage of accumulated reserves, they could cut down the need for
deliveries by 20-50 percent, but not more. With petroleum, the U.S. could do
this by using its strategic reserves and causing an artificial temporary
increase in the supply of oil on world markets or by increasing deliveries from
certain OPEC countries, like Saudi Arabia or Iran. The EU gas market can
increase supplies of liquid gas from the U.S. and the Persian Gulf countries – primarily
Qatar – and refuse to sign any more long-term contracts with Gazprom, the price
of its gas being tied in to the price of oil.

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