Wiiw Research Report 343: Oil and Gas Dependence of EU-15 Countries
Total Page:16
File Type:pdf, Size:1020Kb
Forschungsberichte wiiw Research Reports | 343 Edward Christie Oil and Gas Dependence of EU-15 Countries December 2007 Edward Christie is a research economist at the Vienna Institute for International Economic Studies (wiiw). Edward Christie The present paper is a revised version of a study Oil and Gas Dependence commissioned by Bank Austria Creditanstalt (UniCredit Group). of EU-15 Countries Contents Executive summary..................................................................................................................i Introduction..............................................................................................................................1 Part I: Intensity and vulnerability indicators for the EU-15..............................................3 Fuel intensity indicators for industry sectors .................................................................6 Import dependence .....................................................................................................12 Imports by country of origin – crude oil .......................................................................14 Imports by country of origin – natural gas...................................................................18 Combined vulnerability indicators ...............................................................................21 Electricity generation in the EU-15..............................................................................24 Part II: The European Union’s energy security debate ..................................................29 Russia’s reliability as an energy supplier ....................................................................29 Russia’s incentives......................................................................................................31 Selected transit issues.................................................................................................33 The diversification debate ...........................................................................................35 Russia’s expansion within the European Union .........................................................41 An alternative future: Russia’s energy crunch ............................................................42 The European Union’s policy options .........................................................................45 References ............................................................................................................................52 Appendix A – Fuel intensities of industries ...........................................................................53 Appendix B – Oil imports by source country.........................................................................55 Appendix C – Transport and storage indicators ...................................................................56 List of Tables and Figures Table 1 Ranking of EU-15 countries by energy product intensity in industry, 2005 .......................... 6 Table 2 Petroleum products intensive industries, top 20, EU-15, 2005 ............................................. 8 Table 3 Natural gas intensive industries, top 20, EU-15, 2005 .......................................................... 9 Table 4 Petroleum product intensity of EU-15 transport sectors, 2004............................................ 11 Table 5 Production, trade and import dependence for crude oil, ktoe, 2005 ................................... 13 Table 6 Production, trade and import dependence for natural gas, ktoe, 2005............................... 14 Table 7 Crude oil imports into the EU-15 by source country, 2005.................................................. 15 Table 8 Crude oil import concentration, EU-15 countries, 2005....................................................... 15 Table 9 Extra-EEA crude oil imports, country concentration index, 2005........................................ 16 Table 10 Oil import vulnerability index, EU-15 countries, 2005.......................................................... 18 Table 11 Natural gas imports by country of origin, 2005, part I .......................................................... 19 Table 12 Natural gas imports by country of origin, 2005, part II ......................................................... 19 Table 13 Extra-EEA natural gas imports, country concentration index, 2005.................................... 20 Table 14 Natural gas import vulnerability index, EU-15 countries, 2005............................................ 21 Table 15 Combined vulnerability indicator – crude oil......................................................................... 22 Table 16 Combined vulnerability indicator – natural gas .................................................................... 23 Table 17 Share of petroleum products and of natural gas in electricity generation........................... 25 Table 18 Electricity generation (TWh) in France by energy source ................................................... 25 Table 19 Electricity generation (% of total) in Germany, by energy source ....................................... 27 Table 20 Reserves of crude oil and natural gas by country, end 2006 .............................................. 36 Table A1 Petroleum products and natural gas intensities of EU-15 industries, part I ........................ 53 Table A2 Petroleum products and natural gas intensities of EU-15 industries, part II ....................... 54 Table B1 Crude oil import shares by (non-EU) source country, 2005 ................................................ 55 Table C1 Security stockholdings of petroleum products by category ................................................. 56 Table C2 Underground gas storage capacities by country, 2004/2005.............................................. 56 Table C3 Exports of crude oil from the Former Soviet Union, by type of route .................................. 57 Table C4 Selected existing and planned oil pipelines for Westbound CIS resources........................ 58 Table C5 Gazprom’s westbound export pipelines ............................................................................... 59 Table C6 Westbound pipelines for (non-Russian) Caspian gas ......................................................... 60 Table C7 Selected North Sea and Baltic pipelines and interconnectors ............................................ 61 Table C8 North African gas export pipelines to Europe ...................................................................... 62 Figure 1 Real energy intensity, 2005, ktoe per billion dollar of GDP at 2000 PPP ............................ 3 Figure 2 Natural gas intensity, 2005, ktoe per billion dollar of GDP at 2000 PPP ............................. 4 Figure 3 Petroleum product intensity, 2005, ktoe per billion dollar of GDP at 2000 PPP .................. 5 Figure 4 Petroleum products intensity of industry by country, 1995, 2000 and 2004....................... 10 Figure 5 Natural gas intensity of industry by country, 1995, 2000 and 2004 .................................... 10 Figure 6 Fuel mix in electricity generation, % of total, EU-15, 2005 .................................................. 24 Figure 7 Electricity generation (% of total) in the UK by energy source ............................................ 26 Figure 8 Russian coercive actions in energy relations with the CIS, by motive, 1991-2006 ............ 30 Executive summary This study seeks to answer two questions: first, which countries and industries within the EU-15 group of countries are most vulnerable to possible supply shocks with respect to crude oil and with respect to natural gas and, second, what is the current state of the EU’s debate on Europe’s energy security. In order to assess the first question, a set of dependence and vulnerability indicators is provided and discussed, covering total economy and industry-level energy intensities, import dependence, import diversification indices and electricity generation. These results are then combined into an overall indicator of vulnerability. Using this indicator, it is found that the most vulnerable countries with respect to petroleum products are Finland, Belgium and Greece, while the most vulnerable countries with respect to natural gas are Finland, Austria and Italy. Bringing all these results together it is found that France is the ‘star performer’ in the region in terms of energy security. This is thanks to a large share of nuclear power in primary energy supply, combined with a healthy degree of supply country diversification for oil and gas imports. The other main insight from the first part of the study is that the EU-15 as a block is in a less vulnerable position than the average of its constituent parts. This result implies that the European Union’s energy security position can be boosted if it adopts a common energy policy with strong solidarity mechanisms between member states, notably through the promotion of increased energy network interconnection. The second part of the study assesses the current state of the EU’s energy security debate. The focal point of this debate is the EU’s relationship with Russia and its gas monopoly exporter, Gazprom. Russia is already the leading source of the EU-15’s imports of natural gas, accounting for 33% of the (extra-EU) total in 2005. This dependence is set to rise on current trends, given the ongoing depletion of North Sea resources. However, the Kremlin has made no secret of the fact that it views Gazprom as a powerful