Europe Fears It Could Be Too Late to Shake Off Russian Gas Addiction

Russia and Russia-linked companies have dominated natural gas markets in Europe for decades. The fear is that they might be too entrenched to compete with the U.S., which has been ramping up resources to take on new Russian supplies amid political tension over Ukraine, Syria, and more recently allegations of meddling in the 2016 presidential election.

Europe’s slow-moving attempts to wean itself off Russian natural gas have been shaken by Russian President Vladimir Putin’s conflict in Ukraine, but time is running out, threatening to leave customers chilly and industry idle by next winter.

Whether the Kremlin shuts off the taps in response for sanctions or Europe stops purchasing, European policymakers agree that they must plan for a future with substantially less, if any, Russian energy.

Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

As of Tuesday, the following areas have been taken.

Invasion forces’ direction

Russia-controlled or associated countries

Putin recognizes Ukraine as an independent country.

Chernobyl

It is not in use.

Under the command of

separatists

1646558781_582_Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

As of Monday, the following areas have been seized:

Invasion forces’ direction

Russia-controlled or associated countries

Putin recognizes Ukraine as an independent country.

Chernobyl

It is not in use.

Under the command of

separatists

1646558782_390_Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

As of Tuesday, the following areas have been taken.

Invasion forces’ direction

Russia-controlled or associated countries

Putin recognizes Ukraine as an independent country.

Chernobyl

It is not in use.

Under the command of

separatists

1646558783_747_Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

As of Tuesday, the following areas have been taken.

Invasion forces’ direction

Russia-controlled or associated countries

Putin recognizes Ukraine as an independent country.

1646558783_500_Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

As of Tuesday, the following areas have been taken.

Invasion forces’ direction

Russia-controlled or associated countries

Putin recognizes Ukraine as an independent country.

Untethering Europe’s gas market from Russia would be a watershed moment for a region that has become so dependent on gas from the Siberian permafrost that it has developed little infrastructure to support other supply.

The European Union imports over 40% of its gas from Russia, and this reliance has increased in recent years. According to the Bruegel research tank, the EU was paying Russia as much as 660 million euros (approximately $722 million) every day this week, as the West attempted to bind Russia with sanctions. That’s three times what it was when Russia invaded Ukraine.

“It has become brutally evident that we cannot afford to hand over the ability to disrupt our energy markets or influence our energy choices to any third party,” EU energy commissioner Kadri Simson said in a statement to the European Parliament on Thursday.

However, replacing Russian gas is easier said than done. Many of the liquefied natural gas facilities that receive supplies from the United States and Qatar are at capacity. According to one of the firms concerned, two additional terminals authorized by the German government this week will be erected in three years at the earliest.

Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

In the port of Barcelona, Spain, an LNG tanker. In Spain, LNG terminals are barely used 45 percent of the time, according to experts, but pipelines over the Pyrenees can’t carry much more and are tough to develop.

NACHO DOCE/REUTERS/NACHO DOCE/REUTERS/NACHO DOCE/REUTERS/

Analysts predict that renewables will take much longer to make an impact. Closer suppliers, such as Norway, Algeria, and Azerbaijan, are unable to ramp up output sufficiently. Internal connections across Europe’s gas pipeline networks are sporadic, making it difficult to distribute any excess gas.

Any additional LNG shipments will be far more expensive than piped Russian gas, putting a strain on an already-struggled European economy. According to Bruegel, filling up European storage tanks with adequate gas for next winter would cost at least 70 billion euros at present rates, compared to 12 billion euros in prior years.

If the flows halt, policymakers will be faced with unpalatable options like as energy rationing and increased coal use, threatening climate-change targets.

“We’d have to ask individuals to turn down the temperature at home, and we’d have to ask companies to shut down for a period of time,” Bruegel senior scholar Simone Tagliapietra said.

Analysts predict that in the worst-case situation, chemical industries, smelters, and other major gas users would be forced to temporarily shut down. According to economists, this might be accomplished in reality by governments paying corporations to restrict natural gas and electricity usage to a specific level via tenders. Both gas and electricity would have to be rationed, which might result in blackouts and heating problems.

Despite politicians’ long-term attempts to diversify the economy, Europe has mostly failed to prepare. There is presently no LNG terminal in Germany. In its yearly crisis modeling exercise, the EU’s gas transmission system organization failed to account for a total shutdown of Russian gas. Russia is also the EU’s primary crude oil and hard coal supplier.

“Europe believed that energy security was a thing of the past, that it was no longer a significant threat,” Mr. Tagliapietra added. “We simply sat and went about our business.”

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In Germany, a coal-fired power plant. Climate-change efforts would be jeopardized if the country shifted its focus to coal.

Agence France-Presse/Getty Images/Daniel Roland

The extent to which Europe is reliant on Russia varies. Germany, Italy, and a number of Central and Eastern European countries are expected to be the worst hurt, since they depend heavily on Russian imports. The United Kingdom, Portugal, and Spain, on the other hand, do not utilize much Russian gas, but even they would feel the pinch if prices rose. This week, European gas prices set new highs as traders factored in the effect of potential interruptions.

“If Russian gas is stopped, there will be no price cap,” said Martin Vladimirov, head of the Center for the Study of Democracy’s energy and environment program in Sofia, Bulgaria.

On the heels of the sanctions, research firm Capital Economics has lowered its prediction for eurozone economic growth this year by approximately 1%. According to the report, halting Russian gas supply may cut GDP by another 2 percentage points, triggering a recession.

Officials and economists think that the winter and spring repercussions of a complete shutdown now would be manageable. Many gas-fired thermal power plants might transition to oil in a week or two, experts believe, with only minor disruptions in heating supplies. Some industries may need to reduce their operations.

1646558785_725_Europe-Fears-It-Could-Be-Too-Late-to-Shake-Off

In Rotterdam, the Netherlands, storage tanks at an LNG station. The construction of new LNG terminals would take years.

Federico Gambarini/Zuma Press/Federico Gambarini/Zuma Press/Federico Gambarin

The coming winter — and beyond — seems to be more difficult.

According to Bruegel, record non-Russian imports will not be enough to replenish reserves in time for the next cold spell, and Europe will need to lower gas use.

Even if European authorities are able to get additional supplies, transporting them to the correct location would be difficult. Much of Europe’s re-gasification capacity, which is used to convert LNG back into gas, is located on the continent’s western shores in Spain, France, and the United Kingdom, but pipeline infrastructure connecting Germany and the eastern flank are inadequate. According to researchers, LNG terminals in Spain are barely 45 percent used, and pipelines over the Pyrenees can’t carry much more and are impossible to develop.

Bulgaria and Greece have been working on an interconnector for years in the east, which would allow Bulgaria, which imports around 75% of its gas from Russia, to link to a Greek LNG terminal. It is yet to go into service.

In the meanwhile, a shift to coal, in addition to jeopardizing climate-change plans, is also susceptible to the crisis. Russia supplied 49 percent of the EU’s hard coal imports in 2020.

“There is nothing that can be done in the next 12 months to address real physical constraints,” Bruegel added. “Improvisation and entrepreneurial spirit” will be required in the crisis situation.

Long averse to diversifying supply away from cheap and abundant Russian gas, Germany’s gas market trading center ordered 1.5 billion euros worth of LNG from outside Russia on Wednesday. Italy’s foreign minister and the chief executive of oil giant Eni SpA flew to Algeria on Monday to discuss additional supplies. In recent weeks, Austrian officials have met with leaders from Gulf nations.

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Officials at the EU level are working on laws that would compel operators to preserve reserves at a specific level and, in the long term, develop renewable energy.

Because LNG terminals take years to construct, policymakers may also hire or own so-called floating LNG facilities, which are often enormous ships.

The boats dock at ports and distribute gas into land-based pipeline networks for a fraction of the cost of constructing a typical on-land terminal and may be up and functioning in months. When Lithuania established such a terminal in 2014, it was able to lessen its reliance on Russia. Although it is unclear if European authorities are actively following this path, experts claim that there are about a dozen such facilities on the market.

Fracking is another possibility in theory in Europe, however it has been met with strong resistance owing to environmental concerns. Germany prohibited fracking in 2016 due to concerns that the chemicals used in the process may pollute water sources, but it does have some natural reserves it could access if its laws were to change—not one of the possibilities Berlin has said it is considering.

Georgi Kantchev can be reached at [email protected]

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Frequently Asked Questions

Is Europe dependent on Russian gas?

Where will Europe get gas from?

A: Europe will be importing their gas from Russia and Turkey.

How much of europes gas comes from Russia?

A: The EU buys most of its natural gas from Russia. Approximately 36 percent, which is the largest share out of all their buyers and suppliers.

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