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    Editorial: Supping with the devil [NGW Magazine]


Events in eastern Europe will harden Western attitudes against gas. [NGW Magazine Volume 5, Issue 16]

by: NGW

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Covid-19, Natural Gas & LNG News, Top Stories, Insights, Premium, Editorial, NGW Magazine Articles, Volume 5, Issue 16

Editorial: Supping with the devil [NGW Magazine]

Deeply troubling scenes of state brutality against protesters in Belarus have been broadcast by journalists risking life and limb. The rounding-up, imprisonment and torture of bystanders and demonstrators alike by the ‘security’ forces is a continuing outrage.

Its president, Alexander Lukashenko, who has called Covid-19 a psychosis, is holding on to power for now after yet another rigged election. He has appealed for support to Russia, another country that is no stranger to rigged elections.

With Ukraine severing its political ties with Russia – except for continuing gas transit payments – Belarus is the last buffer between Russia and the West. This makes both interference and non-interference risky for European leaders. They have plenty of actual problems of their own to deal with at home as the social and economic damage of the responses to Covid-19 continues to mount.

Russia’s president Vladimir Putin too is in a quandary: no friend of Lukashenko, who has played him off against the EU and received cheap Russian oil and gas, he is understandably also keen to keep this state onside. Running the country will also have a high financial cost for Russia, already hammered by the precipitous and unexpected fall early this year in both price and volume of its exports.

While it is too early to say how and if a regime change will happen, it is likely that any heavy-handed intervention by Russia will put relations with the EU on even colder setting. This will disadvantage gas within the bloc, by association with its biggest single supplier.

And further east is the highly suspicious case of Alexei Navalny, officially the leader of the anti-corruption-focused opposition party but whom Putin refuses to name. German doctors have confidently attributed the “internet blogger’s” condition to poisoning by one or more of a range of substances.

He remains in an induced coma at time of press but reports say he is being treated with the same drug that was used to cure the Russian victims of the Salisbury poisonings, the Skripals. Other victims of Russian poisoning – such as Alexander Litvinenko on British soil – were not so lucky. And the Kremlin, or its friends, have other methods at their disposal too, as Boris Nemtsov’s death illustrates.

Navalny’s support comes from his courageous exposure of cut-price real estate deals and embezzlement by Putin’s circle, at the expense of the nation as a whole. Putin will either look weak – not much can happen involving access to poisons like that without his say-so – or complicit in the crime, if one is proven. Putin’s spokesman, without naming Navalny, said there were no grounds for an investigation, since no poison has been discovered.

These political events are not directly related to gas, but the commodity, for all its benefits, has always suffered from its association with some of the undemocratic and often oppressive regimes – not only Russia falls into that category – that happen to export it, and this is the biggest problem that it faces.

Nuclear and renewable energy escape this charge although neither is without major problems of their own, particularly at the start and end of their life-cycles. These problems are however of a technical, not a moral nature. How often have we read in defence of renewable energy that car batteries, solar panels, wind turbines and so on – and huge amounts of minerals will have to be produced in poorly regulated regions to make them – will find alternative uses after their natural life has ended; or they will be safely disposed of?

Renewable energy is also being asked to do a lot: the expected surplus has to produce hydrogen as well as recharge batteries to justify the cost of building enough to cope with electrification.

The thrust of such special pleading – that as-yet-undiscovered technology will become cheap – does not of course extend to gas, in the reasoning of its opponents. Carbon capture and storage is discounted and we are airily informed that investments in pipelines and so on “lock in” a source of energy that damages the planet at every stage of the process.

The European Investment Bank and many other institutions are giving warning of an end to such financing, even if for now this infrastructure – notably in the Balkans – is needed to ensure ‘diversification of supply.’

It has been shown in the case of Nord Stream 2 that politics cannot be kept out of gas and even out of energy law. These are bad precedents to set, but the fact that the US may be acting illegally if it applies sanctions does not mean that the US is also wrong morally to try to limit the flow of Russian gas to Europe. The use of sanctions is just realpolitik, the aim being to stop the money remitted ending up funding the sort of activities that its European customers also wish to avoid, even as they decry Washington’s interference.

And the fact that the US, with its idle LNG export terminals, is a likely beneficiary of such a reduction of Russian imports does not necessarily explain its actions: it has been opposed to Russian export growth for many decades.

Gas of course will continue to be needed – and in great quantities – as coal and nuclear are phased out, and not only as the carrier of hydrogen. And Russia will continue to provide a lot of it, especially as European climate objectives and environmental activists obstruct – or raise the cost of – domestic production. But Europe’s gas industry will find it ever harder to justify its purchases of cheap gas if it ignores the political price.