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Beware the bear trap

Britain, like most of Europe, is at risk of being the target of Russia’s energy export weaponry

  • Jeremy Leggett
    • The Guardian, 
    • Saturday August 30 2008

Yesterday, a “highly placed source” in Moscow was reported as saying the Kremlin intends to turn off the oil export pipeline to the EU on Monday, so great is Russian ire about the rhetoric in Brussels and warships in the Black Sea. If this is true, we are entering a whole new ball game in what has come to be called “energy security”. Even if the report proves false, the west should be on red alert about energy export weaponry.

Barely noticed in the runup to the crisis in Georgia, Russia signed a deal that gives its energy giant Gazprom control over gas supply from neighbouring Turkmenistan – one of three former Soviet satellite states around the Caspian sea on which Europe is pinning its hopes for a future gas supply. This Turkmen coup deepens Britain’s possible energy dependence on Russia as North Sea production falls away.

Coyly worded press releases on Gazprom’s website shine a faint light on its Kremlin-driven machinations but stop short of illuminating the whole story. Gazprom is on its way to achieving dominion over Caspian gas, and the Kremlin is making overtures to the other states in the region, Kazakhstan and Azerbaijan. They in turn must be watching events in Georgia and wondering how they can refuse those advances.

At the same time, Moscow is cosying up to Beijing on energy and security: Russia and China signed an energy collaboration treaty before the G8 summit, and their armed forces have conducted joint exercises. Caspian gas may yet end up heading eastward, not westward. Gazprom has already threatened to withhold gas exports from Europe should Brussels try to stop it buying up European gas firms. Ten EU states are already largely dependent on Russian gas.

The Kremlin has a strategy to control a vast slab of the world economy via oil and gas. Dmitry Medvedev, lest we forget, used to run Gazprom. The Georgia crisis, if not a planned piece in the strategy, certainly fits. The EU intended to build a pipeline across the Caucasus, avoiding Russian soil, but the sudden unavailability of Turkmen gas, on top of war in Georgia, makes that unlikely now.

In the oil sector, all the major companies have been drawn into the Kremlin’s new great game. Shell has lost majority ownership of its vast Sakhalin project; Total has been reduced to the status of a services company; BP seems on the verge of having 25% of its reserves expropriated by Russian oligarchs. Would it be too cynical to suggest they might be acting as proxies for a company formerly run by the president? A company, it must be noted, that is actually quoted on the London Stock Exchange.

The UK, meanwhile, has no energy strategy, and what plans there are will not come to fruition before the end of the next decade, when it will be too late to escape the Russia trap. We should be urgently embarking on a national clean-energy mobilisation. The government should create investment conditions that allow City capital to flow into efficient-energy technologies that can be delivered in short order.

It is a strange kind of capitalism that takes pension contributions from people and invests them in an agency of a foreign power quoted on the LSE, despite the risk that pensioners will freeze because the foreign power delivers on threats to turn off the gas taps.

We have technologies to rid ourselves of the need for gas. But we do next to nothing. Energy efficiency is low priority, and our renewable generators languish in cottage industries. Energy dependency could turn a new cold war red hot. Energy independence would allow east and west merely to trade insults. Let us start the independence movement in earnest, energy wise.

· Jeremy Leggett, founder and chairman of Solarcentury, is author of Half Gone [email protected]

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