‘Energy security’ is both a popular and a misleading phrase. It implies a defensive and hostile environment in which countries compete tooth and nail for the earth’s dwindling resources. But in reality the global energy infrastructure is founded on close political and economic ties based on agreements both with the oil and gas producers but also between fellow consumers. It is a delicate balance, and one that is periodically upset by pipeline disputes. The most recent one between Ukraine and Russia resulted in the closure of a vital pipeline leaving thousands across Europe and Turkey without heat or electricity. For a brief moment at least, some of Europe’s major powers became aware of a complete reliance on their impoverished neighbours for their energy supply.

The question then for Europe’s richest states is how best to avoid a repeat performance. Policy responses have varied greatly. Germany has agreed a controversial new pipeline, Nordstream, which links Siberian gas reserves directly to Germany through the Baltic. It hopes to bypass any future disputes between a resurgent Russia and its immediate neighbours. A proposed sister pipeline, South Stream, will do similar things for Italy. Britain has built a new Liquid Nitrified Gas (LNG) station in Kent that will allow container ships to bring in gas in liquid form from as far away as Venezuela. More generally, Europe’s major consumers have been talking since 2002 about a new consumer-owned pipeline, called Nabucco, which would reduce its dependence on Russian natural gas. But up untill now the proposed route thourgh Turkey into Austria has proved problematic. In short, every country is attempting to diversify its supply.

But such measures typify the short term and piecemeal approach that Europe has all too often taken with pipelines. Ever since the collapse of the Soviet Union in 1991 there has been a failure to fully engage with the issue of how pipelines should best be run. Just building new ones does not address the underlying frailties of the existing system: some fundamental reforms are necessary.

Firstly, a longer term and more realistic perspective on pricing will be essential. Many of the existing deals being struck under the 1994 Energy Charter Treaty are simply too low and inflexible. When prices surge, as they are wont to do, producing countries such as Russia are left short-changed with little option but to shut the gas off. Europe must accept that to get reliable energy it will have to pay more for it. Indeed, the only way to ensure a continued supply through an increasingly bankrupt Ukraine may be for rich European countries to put up most of the money to keep Russia happy.

Secondly, the current trend towards private ownership of pipelines must be ended. BP, a British oil giant, owns the majority of the BTC pipeline that runs through Georgia. Unregulated and supported by America, it initially struck an impossibly hard deal with the Georgian government. The company now pays the country a paltry $60 million a year in rent (as compared to $200 million in spent in legal fees on the negotiations). The result was that in 2004 an enraged Georgia stopped building after BP failed to adequately earthquake-proof a section of pipeline. Because of a lack of available resources, Georgia also was forced to ask America to train Georgian soldiers to keep the pipeline safe. Corporate giants should not be left in control of such politically sensitive pieces of energy infrastructure.

Many leading energy analysts such as Jenik Radon of Columbia University are therefore pushing for a new institutional structure for pipeline regulation devoid of national and commercial interest. This would include the use of public utility companies to run pipeline operations. They serve the best chance of generating a level of objectivity hitherto missing from energy geopolitics. The likely result would be the renegotiating of the Energy Charter Treaty. At present this agreement favours the western European consumers far too much. It has set unsustainable and unrealistic restrictions both on pricing and on supply. There are no clear reprisals for countries that default on their payments. It is no surprise then that while Russia has signed it, she has failed to fully ratify it. She realizes too that the current situation needs reform. In June 2008 President Medvedev pushed for a new set of pan-European agreements on many things including energy and pipelines. And if Europe’s biggest supplier is unhappy it is vital to listen - we have already seen glimpses of the unsavoury alternative.