Michele Zaccardi April 29, 2022
After Moscow turned off the faucet for Poland, what was feared became a reality. The blocking of methane flows due to Warsaw’s refusal to pay in rubles could be the prelude to what other European countries await. A scenario for which the EU, despite the rumblings, comes unprepared, with individual states still divided and without a unified plan. “Should there be an interruption in Russian gas supplies,” says the report to the Copasir parliament on the consequences of the conflict, “European countries must decide whether to approach the situation in a coordinated manner” or “let everyone decide independently”. your strategy”.
SHARED CHALLENGE
In short, the delay is obvious and risks devastating effects on the economies of the Old Continent, which depend on Russia for almost 40% of their imports. It is “absolutely necessary,” according to the note from the Parliamentary Safety Committee, “that the Union tackles this challenge together, right now with a pricing policy that aims to curb speculation and activate joint inventories.” However, even if you intervene immediately, it would be very difficult to soften the blow. In fact, the biggest criticism concerns the infrastructures: not only the regasifiers needed to restore the liquefied gas that Europe intends to use to replace Russian methane, but also the pipeline network. The network, writes Copasir, “must be sufficient, since it was designed primarily for east-west routes”. So the times will be long. The construction of further regasifiers alone (currently there are 22 in Europe) will take at least 2 years. Given that methane can be found anywhere in the world. “Even before the Russian invasion, there was a problem with a shortage of supplies in the gas market, which caused prices to skyrocket,” Massimo Nicolazzi, professor at the University of Turin and former manager at Eni and Lukoil, explains to Libero , “And these Scarcity can only be overcome by increasing production capacity”. However, ramping up production around the world will take time. “The impact of the investments that are being made in the United States now should be seen in 2024-2025,” the teacher points out. Meanwhile, the Italian government is looking for solutions to break away from Moscow. Palazzo Chigi expects to save around 3 billion cubic meters of gas by reducing energy consumption and another 3.5 by using coal-fired power plants. Measures that could prove insufficient in the event of a halt to Russian methane. Not to mention the impact the blockade would have on prices. “Since Russian gas is delivered through pipelines, Russia cannot divert it to other countries,” Nicolazzi continues, “so in the event of an embargo, the gas will not be extracted and will remain in the fields. In an already “tight” world market, about 15% of the supply would be reduced”. In this case, “there is a risk that prices will continue to rise and there is a strong risk of recession”. On the other hand, unless international tensions ease, there are few solutions. “The embargo would be manageable in the short term,” comments Nicolazzi, “but it all depends on how much gas you can buy from other suppliers.” Also because the storage tanks have to be filled in autumn (35% today) and if no methane can be found in the meantime, the situation could become even more complicated.
COMPLEX SITUATION
“It seems to me that there is a need for a significant reduction in the consumption of things,” the teacher continues, “we must draw up a rationing plan immediately, we can hardly wait for it to get cold”. By this time, some European energy companies had already begun to comply with the Kremlin’s request to pay for gas in rubles. According to Bloomberg, 10 companies have opened accounts with Gazprombank, the bank that manages methane purchases, while another 4 have already conducted transactions through the dual account system in Russian currency and in euros (or dollars). In Italy, only Eni and Edison are affected by the mechanism, whose supply contract with Gazprom expires on December 31.
