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The sanctions imposed against Russia over its decision to invade Ukraine could result in a gas shortage in Europe during the winter months that results in some form of rationing, a top energy official said last week.
Fatih Birol, the executive director of the International Energy Agency, told the Financial Times in an interview that he could not rule out “rationing of natural gas” as the continent has a harsh winter patch stretching for many weeks. He said the rationing would start “from the large industry facilities.”
“I am especially worried about the natural gas markets … if we have a harsh and long winter we may see very difficult days [ahead],” Birol told IEA’s annual conference on energy efficiency in Sonderborg, Denmark, Reuters reported.
He said countries need to quickly improve their energy efficiency which would drive down demand. The paper pointed out that Gazprom, the Russian energy giant, already cut off the spigot to several countries including Finland, Poland, and Bulgaria for refusing to pay in rubles.
Germany and Austria have also reported issues with their energy supplies. Business Insider reported that Berlin announced that some businesses may be “subject to a shut-off if the situation tightens.” German news outlets reported Sunday that Berlin stands to lose $5.4 billion a year to pay for replacement gas.
The EU continues to import around 40 percent of its gas from Russia. The BBC pointed out that the EU vowed to cut Russian oil by 90 percent by the end of the year, but has “not made any commitments on gas.”
(See “HUNGARY REFUSES TO AGREE TO BAN RUSSIAN OIL,” “U.K., BRUSSELS BAN INSURANCE ON TANKERS CARRYING RUSSIAN OIL” and “EU COUNTRIES CAN’T SURVIVE WITHOUT RUSSIAN OIL, FISSURES EMERGE.”)
Birol said at the meeting that if every European customer lowered the temperature inside their homes by 2 degrees Celsius, it would make up for the natural gas supply that was piped through the Nord Stream 1 pipeline.
The EU is already racing to store as much gas as possible and could replace most of Russia’s deliveries this year.
There was also an explosion at an LNG plant in Texas that had been shipping gas to Europe. That means the plant will be forced to close for three weeks. Reuters reported that the loss is about 13-15 cargoes.
“If the outage lasts months rather than weeks, the total loss can be much greater, and Europe’s more comfortable inventory situation will not be quite as reassuring. We would then expect the strong European LNG price premium over Asia to return,” Tamir Druz, managing director at Capra Energy, told Reuters.
TRENDPOST: U.S. President Joe Biden has said that the sanctions against Russia are not intended to prevent more war, but rather present a united Western front. Biden has been praised by supporters for holding a coalition together up until this point, while trying to alienate China.
But the oil issue is a clear threat to the coalition.
Russian President Vladimir Putin said last week that despite Europe’s aspirations, the continent will be unable to break from Russia’s energy supply for years. The BBC report that Putin said nobody knows what new development may occur by then, so companies in Russia will not be “concreting over their oil-wells.”
Putin told young entrepreneurs in Russia that the volume of oil on the market is decreasing but, thanks to sanctions, the prices are rising.
TREND FORECAST: As the war in Ukraine drags on through the summer months and into the fall, even Putin’s loudest European critics will begin to lose interest in punishing Russia economically for its invasion. Fissures in the continent will grow more pronounced and politicians will have to decide if Ukraine’s losing effort is worth sacrificing their own country.
Hungary’s Prime Minister Viktor Orbán said in an interview on Friday that the war in Ukraine is likely to last a long time and that 2023 will be filled with “uncertainty and anxiety.”
Hungary Today reported that Orbán said certain business circles had a vested interest in the war, and they were symbolized by financier George Soros, “who openly talks about the need to extend the war.”
“They are warmongers; they want to profit from the war, while Europe is going to ruin,” he said.