Energy is the utmost important thing that the world

Energy is the utmost important thing that the world challenges since its initial period. An essential challenge in that aspect is the depletion of natural resources. In point of fact, International Energy Agency predicts that global demand for primary energy sources will increase by 36% till 2035.1

On the Eve of World War I, First Lord of the Admiralty Winston Churchill made a historic decision with shifting power source of British navy’s ships from coal to oil.2 After Winston Churchill’s decision energy became most significant part and power of industry and led countries to clash over strategic energy points during World War II. Expanding mass production of energy sources was a historically recurrent phenomenon. Having natural resources gave a huge opportunity to develop end extend military power in terms of guns, chemical weapons, and military machinery and equipment. In this regard, during World War II the usage of new energy-intensive machines increased rapidly in the shortest possible period of time. For instance, in August 1914 Britain had only 154 airplanes, however, during World War II Britain produced and used 131549 airplanes3, which gave an opportunity to win the war at the end by huge consumption of oil.

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After World War II the establishment of European Atomic Energy community in 1957 with Rome treaty laid the foundation of European energy policy. The main aims of this community were the noncontroversial tasks of improving nuclear safety and maintaining safeguards against escalation as well as nuclear energy research for possible future technologies and energy centers.

Despite the fact the issue of energy security first appeared on the European agenda during the oil crisis of 1973/74, it was difficult to forge and implement common energy policy at a union level. As the national interest and policies vary, the EU members always struggled to agree on common priorities and strategies, which still continues on. The antithesis of this fact, growing global energy demand, declining European energy production, dependence and concerns about the reliability of Russian energy sources, increasing energy prices, threads to energy pipelines, ensuring energy security led EU leaders to adopt an “Energy Policy of Europe” in March 2007. Energy Policy of Europe is three pillar strategies focusing on the competitiveness, security of supply and sustainability of energy.4

From the last century, oil and gas resources have played a major role in the consumption of energy in the EU. In spite of less production and consumption in the EU in recent years, oil and gas resources still have the largest share in gross inland energy consumption in the EU’s industry.

The production of oil in EU peaked to its higher volume in 2002, however since then it decreased by 54% and was 69.1 Mtoe in 2015. Top oil producers in EU were UK (43.8 Mtoe), followed by Denmark (7.6 Mtoe), Italy (5.5 Mtoe) and Romania (4.0 Mtoe) in 2015.5 Nevertheless, the major crude oil products are imported from Russia, Norway, Nigeria and Saudi Arabia. In this regard, Russia stands alone with its huge amount of oil export to EU. Dependency rate of oil varies among EU members, especially Eastern EU countries are almost dependent on Russian imports.

Concerning natural gas, EU has more challenges as the gas market offers specific features. Gas is mainly transported through fixed pipelines, which creates long-term interdependence between buyer and producer.

In the EU gas demand is set to increase by 24% between 2005-2025.6 This increase can be clarified by International policy commitments to abate CO2 emissions. Therefore, consumption of natural gas in EU increased by 7.0% in 2016. Major consumptions were recorded in Greece (+30.2%), Sweden (+13.0%), United Kingdom (+12.9%), Portugal (+12.4%) and Ireland (+11.6%), however, a significant decrease was observed in Lithuania (-10.9%), followed by Luxemburg (-7.8%), and Finland (-6.7%).7

Russia and Norway are two main suppliers of gas resources to EU, but Algeria also has a significant share in the main trading in recent years. Besides that, Africa, Middle East, and Caucasus regions can be seen as the basis of diversification of import routes with its natural gas resources.

The two tables below demonstrate unequal allocation of natural oil and gas reserves in certain regions. It seems from the statistics that, there is a huge gap between EU’s production and consumption as well as natural resources compared with other main regions.

Table 1. World oil reserves, production, and consumption (2016)

World Share %

The USA

EU

Russia

The Middle East

Sum

Oil reserves

2.8

0.3

6.4

47.7

57.2

Oil production

12.4

1.6

12.6

34.2

60.8

Oil consumption

19.5

11.0

3.3

9.5

43.3

Source: BP Statistical Review of World Energy, June 2017, pp 12-17

Table 2. World gas reserves, production, and consumption (2016)

World Share %

The USA

EU

Russia

The Middle East

Sum

Gas reserves

4.7

0.9

17.3

42.5

65.4

Gas production

21.1

3.2

16.3

18.0

58.6

Gas consumption

22.0

12.4

11.0

14.5

59.9

Source: BP Statistical Review of World Energy, June 2017, pp 26-31

As it is shown in the tables EU has a huge demand for natural resources which is mostly importing from these regions. Comparing import rates among three major regions, Russia plays the most significant role in EU’s natural resources market.

EU has diverse routes and energy policy directions towards import regions. However, the crisis between Russia and Ukraine in 2006 and 2008 affected to EU, which brought some important issues upon agenda. After dramatic consequences on certain EU members, three major issues; need to ensure required investments, the reliability of exporters, security risks on supply and transit countries, revealed the importance of new energy policy formation by EU in institutional level.

1 International Energy Agency, World Energy Outlook 2010. Paris, OECD/IEA, 2010, Executive Summary, pp 46-47

2 Ensuring Energy Security, Daniel Yergin, Foreign Affairs, Vol 85, No2, 2006, pp 69-82

3 https://www.nationalww2museum.org/students-teachers/student-resources/explore-wwii-history

4 Stacy Closson – Energy Security of the EU, CSS analyses in Security Policy, Vol 3, No 36, June 2008

5 http://ec.europa.eu/eurostat/statistics-explained/index.php/Oil_and_petroleum_products_-_a_statistical_overview

6 Arianna Checchi, Arno Behrens and Christian Egenhofer, “Long-Term Energy Security Risks

for Europe: A Sector-Specific Approach”, CEPS Working Document, no. 309, Brussels, 2009, p.

14.

7 http://ec.europa.eu/eurostat/statistics-explained/index.php/Natural_gas_consumption_statistics

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