Siberian and Norwegian gas compete for Europe's hearths
Decisive steps are needed soon if Western Europe is to avoid an increasing and potentially dangerous dependence on the Soviet Union for natural gas. This is the view of many Western energy sources interviewed here. In particular, they say, decisions need to be made quickly on how to finance and develop the giant Troll gas field recently discovered in Norwegian waters of the North Sea.
United States banks and West European governments may have to be involved, since the field is as expensive as it is necessary, the sources warn. The new field is deep and located in an area notorious for its violent weather.
One proposal calls for a North Sea concrete rig supported by three legs each as tall as the Empire State building. Pouring the concrete for just one leg would take at least three years.
The sources have been in close touch with backstage maneuvering at the 21 -nation International Energy Agency (IEA) here in Paris.
The Troll field, discovered by Royal Dutch-Shell Group of Companies, is said to be one of the world's largest offshore gas fields. The value of the oil and gas it contains, estimated at $285 billion, is more than 10 times Norway's national budget. Parts of it may be declared commercial by next year. The US and a number of European energy officials reportedly want the declaration to be made as quickly as possible, and contracts let for initial development.
Because the field is so deep (more than 330 yards), it will be expensive to develop. One early estimate here is that if oil prices stay stable in real terms through 1995, the field will be uneconomical. The US view is said to be that oil prices may well rise in real terms - and besides that, the field is needed for security reasons.
Moscow is also expected to keep the price of its Siberian natural gas competitive with oil. Currently it aligns its price to low-sulfur fuel oil, since much gas is used to generate electricity in Western Europe.
About 20 percent of gas used in Western Europe heats residential areas. The Reagan administration has long been concerned about the political as well as human impact if the Soviets interrupt gas supplies and French and West German homes suffer.
''It doesn't much matter why the Soviets turn off the taps,'' an energy economist says. ''It could be political blackmail. It could be sheer inefficiency. It could be the need to divert gas to its own people. The threat is the same.''
Having failed last year to stop West European companies with links to US multinational ''parents'' from selling equipment for a major Siberian gas pipeline now being built, US officials turned to the IEA.
At first the US proposed that a new study on energy and security (released at the recent IEA annual meeting here) contain a flat ban on any country buying more than 30 percent of its natural-gas supplies from any single outside country.
This met immediate objections, sources say. The US had the Soviets in mind. But the Japanese complained that they already took 30 percent of their gas from Indonesia, and the French said 30 percent of their supplies came from Algeria.
Also, IEA nations and France, which is not a member, refused to acknowledge that Washington had the right to tell Western Europe what to do while the US sold grain to the Soviets.
Almost at the last minute, the Reagan team dropped this demand. Inside sources now say this was because Washington received private assurances from both Paris and Bonn that despite their public rhetoric, both capitals recognize the strategic dangers of overdependence on the Soviets.
But this still leaves President Reagan caught in something of a paradox. On the one hand, Washington favors the competitive marketplace to solve international economic problems.
On the other, those same market forces may well leave the Soviet Union as the logical major supplier of gas to Europe in the next decade unless steps are taken quickly. Larger Dutch and Norwegian fields will be almost exhausted by the early 1990s. Replacements within Europe are needed.
The Soviets are building pipelines now from Yamal and Urengoi to Western Europe. By 1990 gas will be flowing through them - ''and Russia is the Saudi Arabia of gas,'' one senior energy economist here says.
''Moscow owns about 40 percent of world gas reserves - and it needs foreign exchange to buy food and technology,'' the economist continued. ''Oil and gas exports make up half of Soviet earnings of hard currency abroad. The Soviets want to sell - make no mistake about that.''
Recent estimates have shown that by 1990 France will be receiving 30 to 35 percent of its natural gas from Siberia (amounting to about 4 percent of total energy needs). West Germany will be receiving 30 percent (6 percent of total needs), Italy 35 percent (7 percent), Austria 80 percent (15 percent), and Finland 100 percent (4 percent).
The new IEA energy and security study concludes that ''steps should be taken to ensure'' that no one producer gains monopoly power. Members should also consult ''in depth'' if necessary.
France has finally agreed to adhere to the conclusions. Although not an IEA member, France does belong to the parent OECD (Organization for Economic Cooperation and Development) whose 24 nations adopted the IEA report May 11.
West Europe's dependence on Soviet natural gas -- 1980 and 1990 1980 1990 France 11% 30-35% West Germany 21 30 Italy 26 35 Austria 70 80 Finland 100 100 Switzerland 0 50 Source: International Energy Agency U.S. Department of Energy