In summer 2014, the U.S. and EU introduced several rounds of anti-Russia sanctions targeting the country’s wealthiest and most powerful government allies. In response, Russia introduced a trade embargo against some European states.
On Oct. 30, Russia, Ukraine and the EU finally agreed on the conditions under which Russian natural gas will be delivered to Europe and Ukraine this winter. The EU promised Ukraine financial aid, but it specified that Brussels won’t take on Ukraine’s financial responsibilities in case it can’t make payments.
Ukraine has some of the biggest potential shale gas reserves in Europe. After months of fighting, the country’s industrial Donbas region as well as the economy in general are severely damaged and will take years to recover. The role of energy resources in this war might be underestimated.
According to the U.N., estimated losses from infrastructure destruction in the Donbas region of Ukraine are $440 million since the armed conflict there started. Every day the debt is increasing, and the country is being pulled into economic and humanitarian disaster. It will take years until full recovery is possible. But until the fighting stops, it’s too early to talk about recovery.
Coal has been long considered unclean energy. However, some energy experts argue that it might be an alternative, at least in the short term, for Russian natural gas that Ukraine and Europe are so dependent on.
Europe’s shale gas reserves are almost as big as America’s, but many countries have either banned fracking completely or are experiencing difficulties due to citizens’ opposition and technical challenges. Despite the Ukrainian crisis and its dependence on Russian imports, Europe is still indecisive about pushing forward with shale gas fracking.
Even though Russian gas giant Gazprom and its European partners don’t disclose the terms of gas import contracts, it is known that prices vary from country to country. We try to explain how these prices are set, and why there can be great differences in price even for neighboring countries.
The situation in Ukraine, and Europe’s desire to diversify its energy supplies and decrease Russia’s influence, might facilitate LNG and oil export talks in the U.S., according to experts.
Dependent on gas imports and with an economy in ruins, Ukraine is now reconsidering its energy policy and looking to reform its internal energy market and systems.
Russia-China natural gas deal, signed in late May was interpreted by many as Russia’s attempt to make up for its shaky and deteriorating relationships with EU following the crisis in Ukraine.