UPDATE 1-EU leaders accelerate quest to reduce energy reliance on Russia

Fri Mar 21, 2014 10:47am EDT

Related Topics

* Leaders seek detailed plan by June on reducing reliance

* Officials believe even small reduction would send signal

* U.S. gas is one way to reduce imports of Russian oil, gas (Updates after end of talks, adds quotes)

By Barbara Lewis and Robin Emmott

BRUSSELS, March 21 (Reuters) - European leaders agreed to accelerate their quest for more secure energy supplies at talks on Friday, saying Moscow's annexation of Crimea made them determined to reduce dependence on Russian oil and gas.

The EU has made progress in improving its energy security since gas crises in 2006 and 2009, when rows over unpaid bills between Kiev and Moscow led to the disruption of gas exports to western Europe. However, it has not yet managed to reduce Russia's share of European energy supplies.

Russia provides around one third of the EU's oil and gas and some 40 percent of the gas is shipped through Ukraine.

"We are serious about reducing our energy dependency," said European Council President Herman Van Rompuy, who represents EU governments in Brussels.

"Around the table, there was a strong sense we need a new way to do energy business," he told a news conference after two days of summit talks. "Leaders are ready to maximise their collective hand."

Diplomats said this could mean pooling their purchasing power to negotiate contracts with Moscow instead of each country bargaining for itself and withholding information on pricing and conditions from European partners that has enabled Russia to play the European countries off against each other.

The EU leaders called on the executive European Commission to draw up detailed proposals by June on how to diversify away from Russia in the short and long term.

German Chancellor Angela Merkel said the EU could diversify its gas supplies if U.S. President Barack Obama, due in Brussels next week, agreed to relax restrictions on exports of U.S. gas, now in plentiful supply due to the shale gas revolution.

In response to previous Ukraine gas crises, Europe has made some progress in improving cross-border energy networks, boosting storage capacity and making pipeline flows reversible. It is better placed now to cope with any disruption of Russian exports than in the past.

Accelerated planning procedures, for instance, have cut the lead time to build liquefied natural gas (LNG) facilities to process supplies from all over the world.

INCREASING RELIANCE

Leaders are now pushing for renewed focus on the longer process of reducing Europe's dependence on imports, rather than just moving around what it has.

So far, EU reliance on imported oil and gas, especially from Russia, has been rising, not falling.

EU statistics office Eurostat's energy dependence indicator, showing the extent to which EU relies on imports crept up to 65.8 percent in 2012 from 63.4 percent in 2009.

The share of Russian gas rose to around 30 percent from 22 percent in 2010, while Russia's oil imports accounted for around 35 percent of EU use.

Denmark led the call to ask the European Commission by June to deliver a detailed plan of action, while Britain has circulated its vision of the longer-term measures available.

France and Britain have spearheaded efforts to convince Washington to agree to export more gas to Europe as part of ongoing trade talks with the United States.

But analysts are cautious about how much U.S. gas would be shipped to Europe as higher Asian prices are a bigger lure. Any increase in U.S. exports would have an indirect effect, freeing up more Middle Eastern supplies from Qatar for instance.

"What better opportunity for the United States to extend their influence. It is attractive for political reasons, not necessarily economic ones," one EU official close to the discussions said.

SENDING A SIGNAL

As Europe seeks to increase pressure on Moscow over its seizure of the Crimea region from Ukraine, making Moscow pay an economic price is uppermost in leaders' minds.

Russian gas giant Gazprom gets around $5 billion euros per month from its gas exports to Europe.

Although Baltic states and Bulgaria are among the countries most reliant on Russian gas as a share of their energy use, Germany and Italy import the biggest volumes.

Berlin has been a loyal customer for decades and Russia's Nord Stream pipeline, specifically built to bypass Ukraine, ships Russian gas directly to Germany.

But even in Germany, the rhetoric has shifted. A senior member of Merkel's conservative bloc, Michael Fuchs, told Reuters the decisive question in the debate about sanctions is what would really hurt Russia.

"It could really hit Russia if Germany were to buy less gas and oil. A couple of percentage points less would send out an important signal," he said.

Europe's focus on Ukraine has pushed down the agenda attempts to agree a wider climate and energy framework for 2030 to replace existing energy goals, which expire in 2020.

Friday's talks made scant progress towards a final deal, disappointing those saying an early agreement is vital to give investors in low-carbon energy confidence and help reduce the need for imported fossil fuels.

The renewable energy lobby says the Ukraine crisis has strengthened the case for setting a strong target to use more renewables. Others, however, are pushing for nuclear, coal or shale gas, which could also help the EU to become more energy independent. (Additional reporting by Henning Gloystein in London, Francesco Guarascio, Jan Strupczewski, Luke Baker, Andreas Rinke, Martin Santa in Brussels and John Irish in Paris, editing by David Evans)

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