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Reflective Essay: Energy by Vaclav Smil

With shale gas exploration and production noticeably rising over the recent years, Vaclav
Smils Energy notes that the coming decades will see a rising share of natural gas in global
primary energy supply and, inevitably, many more major pipeline and gas export projects (131).
Recent events in Eastern Europe, more specifically, Russias announcement of internal approval
to allow military invasion of Ukraine, have resurfaced speculation of Russias monopoly of
natural gas supplies and prices to be used as a weapon against Ukraine. With heavy dependency
upon Russia for their gas supply, Ukraine has been completely cut off from natural gas in both
2006 and 2008 in response to dispute with Russia over price (Leggett, 69). Russias gas
monopoly, however, lacks the power it once had due to rises in global natural gas trades as well
as plans of alternative energy, allowing Ukraine to take one step closer to severing their Russian
interdependency and vulnerability. I find it intriguing that natural gas production can potentially
serve as one of the most powerful weapons of retaliation for European nations against Russias
gas monopoly, beginning with Ukraine.
Smil notes that Russia possesses roughly a third of the worlds natural gas reserves (131).
Currently, about 80 percent of Russian gas exports to Europe pass through Ukraine, which in
turn results in even Europe depending upon Russia for roughly 40 percent of imported fuel
(Pechana). Russias monopoly over their Ukrainian supply extends beyond just the pipeline
routes, however, and rules prices. Ukraine has historically received their natural gas supply at a
discounted rate, a benefit to Ukraine especially due to their near-bankrupt financial status
(Mazneva). However, upon Russias recent warning of Ukrainian takeover, they have threatened
to end this discount unless Ukraine agrees to pay $1.55 billion owed for the discounted fuel
which would spiral them even further into debt. This threat is the first time since Moscow
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president Viktor Yanukovychs overthrowing that Russia has used its position as Ukraines
primary energy supplier as a force of pressure (Mazneva).
The boom in U.S. shale gas has forced gas exporting countries around the world to search
for new customers. For example, countries like Qatar and Norway have begun supplying Europe
with a great deal of liquefied natural gas as Europe looked to offset its own declining production,
with Norway selling more to European nations that Russias pipeline Gazprom (Mufson).
Because of this decline in European dependency upon Russian gas supplies, Russia will need
Ukraine to keep Gazprom in competition with various emerging natural gas projects around the
world. Russias monopoly over gas prices remains secure for the time being, but with future
shale endeavors in new nations this security could hopefully be threatened.
Ukraines use of Russias LNG and position as Russias primary natural gas market result
in a relationship in which either nation is dependent upon one another economically. As we have
seen Eastern Europe slowly begin to shift away from their past dependency on Russian gas, the
question of whether Ukraine can find freedom in shale gas has begun to surface. In the
immediate short term, imports of LNG from external suppliers or heavy use of alternative energy
sources are not a reality, however, both Shell and Chevron have been selected by Ukraines
central government for two shale-gas concessions (Reed). Chevron has plans for hydraulic
drilling over a 1.6 million-acre area in Ukraine, and Ukraine has much to gain if it can create an
environment in which energy companies can successfully explore for oil and gas (Reed).
Successful tracts by Chevron and Shell could heavily reduce Ukraines reliance on Russian gas
imports, as well as potentially profile Ukraine as a competitive source of production for other
nations throughout Europe. Economically and politically, Ukraine has a great deal to gain in the
event that exploration is successful in their nation, and natural gas exports could potentially be
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their ticket in the long run for freedom from Russian dependency.
Turmoil within the Ukrainian government and Russias plans for invasion are obviously
major challenges that could hinder exploration and drilling within Ukraine, however, entering
into contractual agreement with Chevron is a step that has taken a long time to commit (Reed).
Natural gas could provide much more to our nations than simply a cleaner source of energy, but
a rise in independence and economic status of many nations around the world. Ive chosen this
topic because shale gas drilling has received a great deal of criticism, particularly from
environmentalists. While I believe it is crucial to our worlds future to monitor our use of
nonrenewable energy sources, I also believe that this use should certainly be weighed against the
benefits that this fuel can provide to numerous economies around the world. The events in
Ukraine prompted me to perceive Smils prediction a bit differently than I otherwise would have.
I recalled Jeremy Leggett addressing the effects of Russias gas monopoly on Ukraine in the
past, and I wondered how this monopolization could be used within the relationship between
Russia and Ukraine today. Sure enough, the threat has been recycled by Russia, although
hopefully natural gas drilling can discredit, or at least weaken this threat in years to come. It is
very interesting to think how LNG is one of the greatest factors fueling our worlds most recent
declaration of war.




Works Cited
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Leggett, Jeremy. "This House Believes." The Energy of Nations: Risk Blindness and the Road to
Renaissance. The Energy of Nations: Routledge, 2013. N. pag. Print.
Mazneva, Elena. "Russia Gas Threat Shows Putin Using Pipelines to Press Ukraine."
Bloomberg.com. Bloomberg, n.d. Web. 02 Mar. 2014.
Mufson, Steven. "Shifting Energy Trends Blunt Russias Natural-gas Weapon." Washington
Post. The Washington Post, 02 Mar. 2014. Web. 03 Mar. 2014.
Pechana, Sergio. "Ukraine in Maps." The New York Times. The New York Times, 26 Feb. 2014.
Web. 02 Mar. 2014.
Reed, Stanley, and Andrew E. Kramer. "Chevron and Ukraine Set Shale Gas Deal." The New
York Times. The New York Times, 05 Nov. 2013. Web. 03 Mar. 2014.
Smil, Vaclav. "Energy In The Modern World." Energy: A Beginner's Guide. Oxford: Oneworld,
2006. 131. Print.