The European Union is the largest energy importer in the world. Though its oil imports will likely remain relatively stable in the coming years, its natural gas imports are expected to increase in response to rising demand. Because the European Union’s oil production has declined dramatically over the past decade, the bloc has become increasingly reliant on imports. The European Union has revised its stockpiling policy in response, but concerns about the bloc’s heavy reliance on Russian natural gas imports still linger.
Nuclear power accounts for the largest share (29%) of the European Union’s energy production, followed closely by renewable energy. Most of the European Union’s oil is produced in the North Sea, with the United Kingdom contributing more than 75% of total production. Though many believe that the North Sea, like the Gulf of Mexico, could hold significant energy reserves in deepwater formations, environmentalists have pushed back against the development of deepwater fields.
The U.S. Shale Revolution gave rise to hopes that Europe would be able match the United States’ success in harnessing new technologies, leading to a Shale Revolution of its own. Though the Continent has substantial shale reserves, the largest of which exist in Poland and France, its ability to recover those reserves remains uncertain. According to the European Academies Science Advisory Council, Europe’s geological formations are older, more complicated and more fractured than those in the United States, making only a fraction of Europe’s known reserves economically recoverable.
Historically, the European Union’s energy policy has focused on prioritizing environmental sustainability over other energy goals, with a commitment to reduce energy needs by 20% by 2020. While the bloc still estimates that it is on track to meet this goal, its energy priorities have shifted in response to the 2009 financial crisis and the 2014 Ukrainian crisis.1 European leaders have begun emphasizing energy security in the form of supply diversification, as well as industrial competitiveness over environmental sustainability.
The bloc’s ties to Russia, a gas-producing powerhouse, are significant. In 2013, Russia provided 30% of the 18.7 trillion cubic feet of natural gas the Continent consumed.2 Russia’s reliance on Ukraine to transport its gas to Europe has become more significant in recent times. Historically, as much as 80% of Russian liquefied natural gas exports to Europe have flowed through the Bratstvo and Soyuz pipelines, both of which travel through Ukraine. In 2013, about 16% of exported gas products traveled through Russia’s now-embattled neighbor. While Ukraine has been an important component of the Russia-EU trade partnership, the recent political break between Russia and Ukraine has had negative economic consequences for Russia. Since the onset of violence in 2014, Russia has experienced a decline of nearly 6% in its crude oil exports.3 Moreover, the European Union has publicly sided with Ukraine and has coupled this political support with new economic measures that encourage import diversity away from Russia. While the European Union cannot completely divorce itself from Russia as a trade partner, the relationship shows no signs of warming in the near future.
New oil and gas technologies have the potential to change Europe’s energy landscape by opening up new production opportunities across the globe. Though the conversation usually revolves around the creation of specific pipeline routes to Europe that bypass Russia, greater production among non-Russian suppliers is more important for European energy security because of its contribution to the global bathtub. While reliance on Russia has been at the forefront of debate concerning the EU’s energy supply, Russia’s ability to use oil and gas as an effective political weapon has been spotty at best.