Germany's denuclearization shot in Russia's arm

For three years, Russia's enormous, natural gas-led political and economic influence in Europe has been undermined by a technological advance -- Houston wildcatter George Mitchell's refinement of hydraulic fracturing, or fracking, which unleashed a gusher of new natural gas supplies. The new supply triggered a chain reaction, undermining Russia's monopolistic hold on Europe's natural gas market, and its general influence on the continent.

Now, a technological disaster -- the meltdown of Japan's Fukushima nuclear reactors after a March earthquake and tsunami -- has restored Moscow's place on the playing field. At once, Germany -- already reliant on Russia's Gazprom for 30 percent of its natural gas -- will be buying much more gas in order to compensate for the loss of nuclear power, which provides 28 percent of Germany's electricity. Hence Germany -- for many years Russia's most important ally in Europe -- is likely to become an even more open ear for the policies of Prime Minister Vladimir Putin. "Higher gas demand will mitigate the U.S. shale gas impact and strengthen Gazprom's hand again," Roderick Kefferputz, an analyst at the Brussels-based Centre for European Policy Studies, told me in a Twitter exchange.

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Nord Stream, the giant new natural gas pipeline from Russia to Germany, will come on line by the end of the year, and now will almost certainly be doubled in size with a parallel line. South Stream, another proposed Russian gas pipeline to Europe that I had thought was dead, is now back on life support. So is Nabucco, a U.S.-backed pipeline from Azerbaijan to Europe. All this gas will be needed now that Germany won't be producing nuclear power for the home market.

If Poland proceeds to develop a large shale gas industry of its own, the pendulum could swing back against Gazprom. But for now, it appears that the Baltic states and a handful of eastern European countries that rely on Gazprom for 100 percent of their supply will remain weak. Relative U.S. influence will decline because as often as not, U.S. foreign policy conflicts with Moscow's. Germany, Italy and others are now more likely to side with the Russian view.

http://oilandglory.foreignpolicy.com/posts/2011/05/31/germanys_nuclear_shot_in_russias_arm