By John Browne, Lord of Madingley and former CEO of BP, a special contributor to TheStreet
LONDON (TheStreet) -- When I was CEO of BP (BP), I met regularly with Vladimir Putin to discuss BP’s investments in the country. There was a routine: The President would say or do something to seize the upper hand. In response, we would submit the same four-point agenda at every meeting in an effort to introduce some calm and regularity. It was important not to overreact. The same is true today when it comes to the geopolitics of energy. As a major oil and gas supplier to an energy-dependent Europe, Russia appears to have the upper hand when it comes to its conflict with Ukraine and the prospect of European sanctions. But the reality is more complex and Europe is in a stronger position than some commentators are suggesting.
The European Union obtains around one third of its gas from Russia, with half of that flowing through Ukraine. But beneath that total lies wide variation. The UK, for example, is independent of Russian gas. Germany relies on Russia for around one third of its total supply, while the Baltic States and Finland are wholly dependent on Russian supplies. The technology exists to even out such imbalances, and it is already being used. European gas inventories, for example, are at a three-year high for this time of year, providing a buffer in case of shortages. And when Russia halted supplies to Ukraine earlier this year, neighbouring EU states sent some gas back to Ukraine via reverse-flow pipelines. Investment in interconnectors, reverse-flow pipelines and storage sites, as well as accelerating the completion of the internal energy market, will create options for countries in need.