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The Canadian Press - ONLINE EDITION

Amid Russia-Ukraine gas standoff, European Union proposes plan to diversify supplies

AMSTERDAM - The European Union's executive has proposed a strategy to secure the bloc's energy supplies — and reduce its reliance on Russia — by seeking new sources in the Caspian Sea, the Mediterranean, and importing more liquefied natural gas, or LNG.

But the plan, which EU Energy Commissioner Guenther Oettinger presented Wednesday and will be considered by European leaders at a June 26-27 summit, offers no quick fixes. Europe imports 40 per cent of its gas from Russia, half of that via pipelines that run through Ukraine, a situation which would take years of investment to alter.

That dependence proved a weak point for Europe when Russia shut down transmission to Ukraine in 2006 and 2009. It has also been a factor during the current conflict in Ukraine, as European countries reliant on Russian gas have proved reluctant to sanction Moscow over actions such as its annexation of the Crimean Peninsula.

President Vladimir Putin said Wednesday he is hopeful Ukraine can resolve a dispute with Russia's state-controlled gas company Gazprom. Russia wants Ukraine to pay a back bill of $2 billion this month in exchange for lower prices in the future — or face a cutoff that would also affect Europe.

Oettinger has said the EU endorses that basic plan, though Ukraine prefers a price reduction first and has yet to agree.

Putin said Russia has already shipped too much gas to Ukraine without payment.

"It can't go like that forever, and everyone understands it," he said on Russian television.

Oettinger said at a press conference in Brussels Wednesday that to wean themselves from foreign energy dependence, European countries should consider increasing renewable energy production and boosting "sustainable production of fossil fuels."

"We want strong and stable partnerships with important suppliers, but must avoid falling victim to political and commercial blackmail," Oettinger said.

Europe imports about half of all its energy supplies. It targets producing 20 per cent from renewable sources by 2020, from 14 per cent at present.

It does not have large remaining reserves of fossil fuels other than shale gas that could be tapped by hydraulic fracturing, or "fracking." But France and several other countries have all but ruled that out due to environmental concerns.

Oettinger suggested the EU adopt a binding target later this year for energy savings by 2030.

Most European countries with a coastline, except Germany, have at least some capacity to import LNG, which is shipped in tankers in condensed liquid form and requires special terminals to be processed.

However, some countries may not be willing to follow Oettinger's advice and build more: LNG is more expensive than Russian gas.


AP reporter Vladimir Isachenkov contributed to this story from Moscow.

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