Winter, with its need for heating, is barely coming to an end, as the pressing question of the next one is brewing. How can the overdependence of the European Union (EU) on Russian gas supplies be reduced as soon as possible? In other words: how can we do without about 40% of gas consumed and 45% of imported gas in 2021 at the EU level? These percentages vary from country to country, with France significantly lower (17% of its gas imports in 2020) and Germany significantly higher (over 50%). But the EU’s problem remains with Russia, which also supplies it with oil and coal.
After February 24 and the attack of the Russian army on Ukraine, the most effective sanction against Moscow would be to stop imports of hydrocarbons, the main source of foreign exchange for President Vladimir Putin. However, European states have so far refused to do so; this measure would put them at risk.
“Russia’s use of its natural gas resources as an economic and political weapon shows that Europe must act quickly,” said Fatih Birol, executive director of the International Energy Agency (IEA) at the Organization for Economic Cooperation and Development. On March 3, without questioning market liberalization, the IEA proposed measures to cut more than a third of these Russian shipments. In 2021, they amounted to 140 billion cubic meters (m3) by pipeline and 15 billion m3 by sea in the form of liquefied natural gas (LNG).
Diversify your suppliers
For next winter, the prospect of European sanctions or a Russian detention creates “significant uncertainty about Russian gas supplies,” Mr. Birol said. On February 22, two days before the start of the conflict in Ukraine, the German government was already freezing permission to commission the Nord Stream 2 gas pipeline. Nord Stream 1, Deputy Prime Minister Alexander Novak said in a televised address dated March 7, quoted by Bloomberg.
From the very beginning, the IEA recommends not to renew any long-term contracts with Russia, i.e. 15 bcm expiring from 2022. The EU may replace 30 billion Russian m3 with contracts from other suppliers. Through gas pipelines (10 billion m3), for example, from Norway or Azerbaijan, as production in the EU is falling. As well as by sea (20 billion m3), the US and Qatar have made LNG trade a specialty. Where pipes restrict the supply of gas to a regional market, ships globalize it, causing it to be monetized at a high price, exploiting competition between demand in Europe and Asia.
You have 61.51% of this article left to read. Further only for subscribers.