Pushing ahead with controversial 'fracking' schemes could help reduce Russia's leverage over Europe, William Hague has suggested.
The Foreign Secretary urged a broader energy mix as he insisted nations should not "run scared" of Moscow's "bullying behaviour" in Ukraine.
The intervention - in an article for the Sunday Telegraph - came amid continuing tensions in Crimea, where pro-Russian forces have been storming Ukrainian military sites.
Mr Hague wrote: "With thousands of Russian troops still massed on Ukraine's borders, there is a grave risk of the Ukraine crisis deepening.
"That is why the EU, the United States and our allies have imposed sanctions.
"The European Commission are working now on more far-reaching economic measures that will be imposed if Russia takes further steps to undermine Ukraine."
He said Britain and her allies had "never given up on diplomacy or sought a path of permanent confrontation with Russia".
"But nor should European nations run scared before bullying behaviour," he added.
Mr Hague said it was now necessary to "contemplate a new state of relations with Russia that is very different to the last 20 years".
He warned Moscow that it was not simply facing "short-term pain" of limited sanctions, but long-term "isolation and stagnation".
Part of that could be a fundamental rethink by the West of its energy sources, including accessing shale gas reserves through 'fracking'.
"In Europe, ideas are now being discussed for how we build greater energy security," Mr Hague wrote. "If necessary, we should be prepared to diversify future sources of natural gas supplies to Europe, including through the Southern Corridor.
"We would need to boost investment in gas interconnections and terminals in Europe, and develop indigenous European energy supplies for countries wishing to develop their own resources, such as shale gas.
"And it would mean helping Ukraine and neighbourhood countries to liberalise their energy markets, increase energy efficiency and ensure more resilient energy supplies.
"Russia's actions in Ukraine should make it much more likely that the European Union takes such decisions."
Amid political turmoil and efforts to shut down social media networks in Turkey, Mr Hague also cautioned of "oligarchisation" in that region that could damage European democracy.
"Russia has been damaged by its failure to develop independent institutions and by an oligarchic economic system," he said.
"There is an evident danger of some of the same corrupting habits spreading into democratic countries.
"In South East Europe and the Balkans in particular, we are seeing the creation of concentrations of economic, political and media power which could inhibit the development of genuine or stable democracy and reverse progress already made.
"If this is allowed to go unchecked, European democracy could be damaged and undermined over the long term."