Russia Could Cut Off Gas Supply to Europe, IEA Warns

The International Energy Agency (IEA) has warned that Russia could cut gas supplies to Europe entirely in order to boost its leverage against the West following Moscow’s invasion of Ukraine.

Russia has severely restricted gas flows to Europe in recent days. The Kremlin blames a delay in servicing equipment caused by European Union sanctions, while Europe accuses the Kremlin of playing geopolitics.

“Considering this recent behavior, I wouldn’t rule out Russia continuing to find different issues here and there and continuing to find excuses to further reduce gas deliveries to Europe and maybe even cut it off completely,” IEA Executive Director Fatih Birol said in a statement to the Reuters news agency. “This is the reason Europe needs contingency plans.”

Energy crisis

A full cutoff of Russian gas would plunge Europe into an energy crisis, said Tom Marzec-Manser, head of gas analytics at Independent Commodity Intelligence Services.

“Gas supplies from Russia at the moment — pipeline supplies, that is — are literally a quarter of what they were a year ago. So, the volumes are very, very low, and clearly that’s causing concerns. It means rebuilding storages, storage stocks, ahead of the upcoming winter is that much more difficult,” he told VOA.

Storage

Currently, Europe’s gas storage facilities are 55% of capacity. The EU announced last month that it aims to reach 80% of capacity by November.

“All the LNG [liquefied natural gas] from America, in particular, has come to Europe, and it’s helped rebuild storages at a faster rate than usual,” Marzec-Manser said.

The declining pipeline flows from Russia have raised doubts over whether the EU storage target can be achieved. The Nord Stream 1 pipeline that carries gas from Russia to Germany is due to close for maintenance next month.

The soaring gas prices since the invasion of Ukraine has benefited Russian state-owned Gazprom, Marzec-Manser added, referring to the Russian gas company.

“A huge amount of money has been made in a short period of time, which is probably going to carry Gazprom through for the next few years at least, in terms of being able to really restrict flows but still have money in the bank,” he said.

German emergency

Germany gets around one-third of its gas from Russia. The government declared Thursday it had entered the “alarm stage” of its emergency gas plan, calling on Germans to reduce consumption.

“We have a disruption of the gas supply in Germany, that is the definition, which is why it’s necessary to declare this emergency gas plan,” Vice Chancellor Robert Habeck told reporters Thursday. “Gas is from now on in short supply in Germany.”

European consumers must play their part to avert an energy crisis, German economic analyst Claudia Kemfert said.

“It was expected that this situation would come sooner or later. But what is important now is that we do everything we can to save gas,” she told Reuters.

Analysts say the industrial and power sectors will also be asked to reduce consumption, raising fears that an energy crunch could plunge Europe into a recession.

“The industrial demand sector, the power sector, is really going to have to play a key role in conserving gas. We’ve seen proposals from many governments around Europe to permit continued use of coal,” Marzec-Manser told VOA.

Continued coal use would reverse Europe’s pledge to phase out coal and other fossil fuels. Calls are growing for the faster development and rollout of renewable energies.

“That means more space for wind energy. That means a faster program of solar energy on as many roofs as possible — that’s not going fast enough. I would like to see a booster program for renewable energies, which is appropriate to the situation because we are in a crisis and emergency situation,” Kemfert said.

European leaders have been scrambling to find alternatives to Russian gas. U.S. LNG imports have risen sharply, while the EU this month signed a deal to boost LNG supplies from Israel and Egypt.

Analysts, however, say Europe will struggle to replace Russian gas within the next few months and warn that a cold winter would exacerbate the crisis.
…