EU must improve relationship with Russia to ensure security of gas supply

Maintaining strong relations with Russia was key for the European Union to ensure security of gas supply, key players in the oil and gas industry told an energy conference being held in Malta.

Over 30 countries including EU member states and North African countries are taking part in a high-level conference held at the Intercontinental on the looming gas crisis. Recent events in Ukraine, which have seen Russia cutting off gas supplies to Ukraine over unpaid bills, has prompted energy ministers to come together, concerned that this situation could affect Europe’s gas supply in the long-term.

The conference is being co-hosted by Malta’s Energy Minister Konrad Mizzi and his Cypriot counterpart George Lakkotrypis.

But key players in the energy field like Bruno Lescoeur, CEO at Edison and Leonhard Birnbaum, member of the board of management E.ON, have made it clear that Russia was part of the solution Europe was seeking in ensuring security of gas supply.

“The oil and gas industry is facing huge challenges and Europe needs to strengthen and diversify its long-term relationships with the potential energy suppliers. Given the size of its resources, Russia is by far the biggest existing and potential future supplier for Europe,” Lescoeur said.

Both Lescoeur and Birnbaum urged EU policy makers to maintain good relationships with Russia.

“Part of the problem is that [governments] must understand the need to establish better long-term negotiations with suppliers. Strenghtening relations with Russia also means diversifying routes,” Lescoeur argued.

Birnbaum reiterated that Russia will remain part of the game and advised policy makers “not to get too much distracted by turmoil… normal relations with Russia must be reestablished”.

Birnbaum, who was giving his views on the outlook of the European gas markets during the 2020-30 period, urged politicians to create the necessary environment that will allow energy companies to work. He also said that diversifying sources of supply did not only mean that the consumer was getting rid of his dependence on the supplier.

“The relationship between a supplier and consumer could be one of common interest and not necessarily one of dependence,” he said.

Malta’s Energy Minister also chaired the first discussion which analysed the role Southern and Eastern Mediterranean countries could play in ensuring EU gas supply security.

During his opening remarks, Konrad Mizzi said Malta’s position in the heart of the Mediterranean with strong links to both the European Union and the Northern African region made Malta perfectly placed to take a leading role in this.

Malta is just 60 miles south of Italy, 90 Miles north of Libya and right in the middle of the key Mediterranean shipping routes.

“Whilst Malta has a strategic position, when it comes to energy security, Malta is a small and isolated energy system. We never had the luxury to get complacent when it comes to energy security, whilst the sustainability of our energy mix requires a great degree of resourcefulness, especially when it comes to energy affordability in real terms,” Mizzi said.

“We are well familiar in relative terms with the energy security syndrome that is becoming ever more apparent as a result of geopolitical realities surrounding us.”

Mizzi said the future of energy supply was “about much more than lower prices at the petrol pump”.

“It leads to lower cost of doing business. Increased competition and reduce pollution. It leads to lower bills for families. In short, a good energy policy benefits everyone,” he said.

According to Mizzi, Europe was confronted with a straightforward choice: “act now to get the infrastructure and investment we need in place...or get left behind.”