The New Economy

March 07, 2014 12:34 ET

David Howell: Crisis from the East Threatens Europe's Energy Supplies

LONDON, ENGLAND--(Marketwired - March 7, 2014) - With tensions between Ukraine and Russia at boiling point, and Europe's energy supplies at risk, there is no better time than the present to ask whether or not the Caspian Corridor could offer an alternative method of supply for the continent.

The New Economy spoke to David Howell, Chairman of the House of Lords select committee on soft power and British overseas influence and former secretary for energy and transport about what the on-going conflict could imply for global and European energy markets.

"Energy security is vital; energy affordability is vital. At the moment we haven't got that in Europe," warns Howell. "Europe still relies heavily - in some cases 100 percent - on Russian gas; on Gazprom's and Russian gas supplies. And if that was interrupted very suddenly, there would be difficulties all round."

In The New Economy interview, Howell goes on to emphasise that the search for diversified energy resources will go on regardless of the conflict in Ukraine, and that any opportunity to expand Europe's supply base should be capitalised upon. "Europe, central Europe, depends on Russian gas. That is today and tomorrow's affair. If it cuts off people are going to be very miserable; jobs lost, much suffering, cold and so on. But in the medium-term, obviously people are going to look for more diversified resources for gas, including Caspian gas, and that is the way gradually we should go."

The prevailing issue here is one of cost, and this is something that applies not just to Europe's energy supplies, but to global energy markets. "We are moving, and this is perhaps not understood widely, into a global gas grid and global gas system. Hitherto it's been separate regions: American gas, European gas, Central Asia, and then the Pacific Rim. Now all these four areas are merging into one gigantic trading system," says Howell.

"Russia may be mighty, just as America may be mighty. But there are forces at work, which are mightier still! And certainly price is one of them. If you can't sell the gas, you can't persuade people to take it, you have to either lower your price, or go elsewhere."

To see The New Economy video interview in full, head over to our website or click on the link below.

http://www.theneweconomy.com/energy/ukraine-crisis-cold-war-warriors-rattling-sabres-says-lord-david-howell-video

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