Will gas be cut off between Russia and Europe? In this lying poker game, Brussels is trying to find a solution to Russian blackmail. The European Commission has outlined an action plan to do without Russian gas.
Spring is here in Europe. In a stifling energy context, rising temperatures are giving Europeans a respite. At the end of March, natural gas reserves do not exceed 25% of their capacity, but the mild weather reduces total consumption. Even better, in the last few days, Europe has generally received more gas than it consumes, thus making it possible to restart (gently) storage.
The frost of April 2021 should remind us that the weather is unpredictable, but the current good weather should nevertheless make it possible to meet a possible new climatic danger with calm on the gas side. In fact, the states have mainly turned their eyes to next winter with a time trial launched to fill the natural gas tanks.
Will there be Russian gas in European pipes? All players, starting with the head of TotalEnergies, recognize that it is not possible to do without it. But diplomatic tensions sometimes override economic common sense. On Wednesday, Vladimir Putin called on European countries to pay Gazprom in rubles to help the Russian currency. Such a request is akin to “a breach of contract”, Berlin replied.
European Task Force
To compensate for a possible cut in supplies, the European Commission is struggling to find alternative solutions. On Wednesday, Brussels presented its options for dealing with a disaster scenario and, above all, projecting itself into a longer future without Russian gas.
“Europe must act quickly to secure energy supplies for next winter and ease the pressure on our citizens and businesses from high energy bills,” promised Energy Commissioner Kadri Simson.
First rule: oblige Member States to fill 80% of gas storage capacity on 1 November and even 90% in the next few years. This measure already exists in France, but not in all countries. Germany, for example, had a historically low level at the end of September last year. Similarly, Austria had only half filled its storage capacity.
But this European commitment will not change much on the Russian problem. Brussels therefore proposes to collect orders from European countries by setting up a “task force” which, according to the model of vaccine orders, will negotiate prices and, above all, win as many orders as possible.
“By consolidating demand, the Task Force will facilitate and strengthen the EU’s international influence among suppliers in order to guarantee imports at attractive prices in anticipation of next winter,” the European Commission explained in a press release. In fact, experience with vaccines has shown that it is actually the highest bidder who wins the orders.
The LNG Savior?
The second problem is the lack of alternatives. Norway or Algeria, main suppliers with Russia, do not have the capacity to increase their production in the short term.
The alternative must be liquefied natural gas (LNG), which is transported by tanker and is therefore not dependent on gas pipelines. This option offers new supply routes to Europeans: primarily Qatar, but also Nigeria or Australia. And especially the United States as President Joe Biden arrived in Brussels on Wednesday. “I will discuss tomorrow with President Biden how to prioritize LNG deliveries from the US to the EU in the coming months,” European Commission President Ursula von der Leyen told parliament. European in Brussels.
“Our goal is to achieve a commitment for additional deliveries for the next two winters,” she added.
Still, it would be necessary to replace the approximately 140 billion cubic meters of Russian gas. “It’s impossible, it’s a chimera,” Vincent Demoury, general delegate at GIIGNL (International Group of Importers of Liquefied Natural Gas), explained to BFM Business. “When we hear the European Commission say that we will import 50 billion cubic meters of extra LNG by the end of the year, it is unrealistic, illusory. We must not fool ourselves.”
Europe must first face formidable competition from China, which consumes a lot of gas. Similarly, Europe is fairly well equipped with LNG terminals, which are crucial for the gasification of imported LNG, but it will not be enough to quickly replace Russian gas.
If the locks close, Europe will face a deep energy crisis. The solutions exist: renewable energy, nuclear, hydrogen, biomass … but here again all these possibilities can not be developed massively within such a tight time frame.
More realistically, fuel oil or even coal could replace some of the gas, while high-energy sobriety could allow welcome savings. Crossing fingers that next winter will be mild …