Oil may be headed for $200 a barrel and the price of everything from wheat to gold set to cause yet more ructions in world commodities markets, but for European businesses, households and governments, natural gas may be the next big headache. Like oil, the price of this fossil fuel is rising dramatically. Now EU officials and others in the industry are warning that Europe is facing a supply crunch as well, whatever the price.

Europe is “sleepwalking” its way to a “staggering dependence on imports,” Paulo Scaroni, chief executive of Italy’s national energy company, Eni, told the World Energy Congress in Rome late last year. By 2020 gas demand could be 40% higher than in 2007, at a time when production in the 27-nation EU was “expected to halve.” The result, he stated, will mean doubling Europe’s annual imports from 300 billion cubic metres to 600 billion cubic metres. “We clearly run the risk of a gas shortage in the future,” he added.


His words came shortly before the EU released its long-awaited report on a Priority Action Plan for achieving energy security in Europe. It followed a worrying stand-off two years earlier between Russia’s gas monopoly, Gazprom, and Ukraine over transit fees and gas pricing. Supplies to western Europe were cut for several days, causing an urgent rethink in Brussels about energy security, as well as the need to tackle energy integration in Europe and climate change. The Plan, launched in December, noted that Russia supplied more than half of the EU’s gas imports and suggested measures to diversify supply. It also called for expanding the continent’s gas transport and processing facilities, as well as stepped-up efforts to promote integration and investments in sustainable energy.

“One of the main tools we have to improve our security of supply is diversification,” says EU energy commissioner Andris Piebalgs. “Establishing stable frameworks for energy cooperation with potential new suppliers is therefore a priority for us.” Brussels estimates that imports will need to rise 85% by 2030.