EU Oil and Energy Production Plummets

Last year was disastrous for energy production within the EU, especially Britain. Massive energy production declines in Britain are aggravating the EU’s external energy dependence. Consequently, Europe is becoming increasingly dependent on foreign energy suppliers.

The European Union was forced to import a record amount of energy last year, as output in every major production category including oil, natural gas, coal and nuclear power fell. Although overall EU energy demand remained flat, total energy production from all sources cascaded 4.2 percent compared to 2004.

The largest energy sector drop was in crude oil production: This fell by 9 percent, primarily due to Britain’s aging North Sea oil fields, which experts say are beginning to run dry.

Natural gas production slipped by 5.8 percent, also largely because of production declines from Britain’s North Sea, as well as declines in Dutch fields, which fell 7.7 percent and 5.9 percent respectively.

Coal output within the EU dropped by 5.7 percent, again in large part due to significant declines in Britain, the EU’s third-largest coal-mining nation. However, Poland and Germany, the EU’s first- and second-largest producers, also experienced coal output reductions.

Surprisingly, even with the upsurge in nuclear power generation interest that has swept the globe in recent years, nuclear power production still declined by 1.3 percent across the EU. Germany, the EU’s second-largest atomic power generator, cut output by 3 percent, overwhelming the slight increase in French output.

The EU now imports 56 percent of its energy needs—an amount that is increasing. In 1995 this figure was only 44 percent. If trends continue, by 2020, the EU will need to import two thirds of its energy demand according to the European Commission report “European Union Energy Outlook to 2020.”

Germany, Italy and France already import 90, 91 and 95 percent of their daily oil needs respectively, and the vast majority of their natural gas needs. These nations typify the foreign energy dependence which almost all EU nations experience.

As European dependence on foreign energy increases, Europe will become increasingly vulnerable to energy shocks. Watch for the push for greater European energy security to continue to be led by Germany, Italy and France as they seek to gain control of foreign energy supplies.

Global competition for energy is about to heat up.