EU energy reliance on Russia to grow after Georgia

By Tom Bergin - Analysis

LONDON (Reuters) - Russia's invasion of Georgia has reinforced Europe's desire to avoid over-reliance on Moscow for energy but EU countries' reluctance to pay for alternatives and uncoordinated policies mean their dependence is likely to grow.

The European Union relies on Russia for around a quarter of its gas and much of its oil while imports are expected to rise as North Sea production falls.

In recent years Moscow has cut off energy supplies to neighbours on a number of occasions, prompting the EU to push for projects that would bypass Russia.

In the past month, this policy has gained new urgency.

"The Georgia conflict appears to reaffirm the Commission's continued policy on strengthening the security of Europe's energy supply, including by means of diversification," EU Commission spokesman Martin Selmayr said.

The EU is pushing the Nabucco pipeline, which seeks to bring Azeri and Central Asian gas to Europe through Turkey, and a trans-Caspian pipeline that would allow Central Asian counties like Turkmenistan to export gas without crossing Russia.

These pipelines have struggled to get off the ground. Now their future looks even more in doubt after Russia's action highlighted the vulnerability of the 850,000 barrels per day Baku-Tbilisi-Ceyhan oil link and the Baku-Tbilisi-Erzerum gas pipeline both crossing Georgia.

"It was unlikely to happen anyway and what has happened in Georgia has made it a whole lot less likely," said Tanya Costello at Eurasia Group, the political risk advisory firm.