Daily Management Review

Europe Warned To Brace Itself For Russia Cutting Off Gas


Europe Warned To Brace Itself For Russia Cutting Off Gas
The International Energy Agency's chief has warned that Russia may cease delivering gas to Europe this winter. Fatih Birol feels that a complete shutdown is unlikely, but that Europe should prepare for the worst-case situation.
Several European countries have reported receiving much less Russian gas than planned in recent weeks. Russian officials deny it was intentional and blame it on technological faults.
Prior to the invasion of Ukraine, Europe purchased almost 40 per cent of its natural gas from Russia, but that ratio has since dropped to approximately 20 per cent.
Birol argues that recent Russian gas supply cuts are "strategic."
The falls make it more difficult for European countries to fill their gas storage tanks, giving Russia more clout in winter.
"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," Birol told the nedia.
The flow of natural gas via Nord Stream 1, one of the key pipelines connecting Russia and Europe, was only 40% of capacity last week. Many experts are sceptical of Russia's assertion that "technical difficulties" were to blame.
Gas supply shortages continue to be reported across Europe. On Friday, the Italian energy business Eni announced that it had gotten barely half of the gas it had expected from Russia's state-controlled gas giant Gazprom, while Slovakia and Austria also reported drops.
France claims it has not received any Russian gas from Germany since June 15, while Poland, Bulgaria, Finland, Denmark, and the Netherlands have had their Russian gas deliveries halted after refusing to pay in Russian roubles.
Last month, European countries agreed to try to insulate themselves against the volatility of gas prices by stockpiling supplies. They agreed to reach at least 80 percent capacity by November, with the most recent data indicating they are at around 55 per cent.
The persistent gas issue, according to Birol, now justifies emergency short-term steps to cut demand, such as boosting the usage of coal-fired power plants and, if possible, extending the life of nuclear power plants. If Russia's gas supply is completely cut off, he warns severe measures may be required.
"I don't exclude the possibility that Europe will need a planned and orderly rationing of gas," Birol says.
"I don't say this is the base scenario, but looking at the last several months, if not several years, the experiences we have had with Russia as an energy partner, this is a scenario we cannot afford to exclude for the time being."