What’s next after Russia cuts gas to Europe?

It wasn’t summer heat waves that made European leaders and businesses sweat.just afraid RussiaManipulation of natural gas supplies will lead to an economic and political crisis next winter. Or, in the worst case, even faster.

Here are the key pieces of information about the energy stress game in war Ukraine:

what happened?

Russia Gas supply cut to five last week European Union countries, including Germanythe largest economy of the 27-nation group, is heavily dependent on Moscow’s gas-fired power generation and power industry.

Russian state-owned energy giant Gazprom has passed north creek 1 pipeline runs under the Baltic Sea Russia to Germany 60% reduction – major gas pipelines in Europe. Italy Saw its supply cut in half. Austria, the Czech Republic and Slovakia also saw decreases.

This is closing Poland, Bulgaria, Denmark, Finland, France And the Netherlands in recent weeks. The closures were initially considered less of an issue because, for example, Poland had already phased out Russian gas by the end of the year, while other countries had alternative supplies.

Photo: Narrator: After Russia cuts gas to Europe, what’s next?

However, recent production cuts have hit major economies and countries that use large amounts of Russian gas. Germany rely on Russia 35% of natural gas imports; Italy is 40%. Currently, natural gas supplies are sufficient to meet current demand.

Why is reduction a problem?

Europe is scrambling to fill its underground gas storage before winter. Natural gas utilities operate on a regular basis, filling up their reserves in the summer—hopefully they can buy gas more cheaply—and then reducing their reserves in the winter as heating demand increases. A reduction would make refilling storage more expensive and difficult to accomplish.

The move also brings closer the specter of a complete shutdown of gas in Russia, which would deprive Europe of all the fuel it needs for winter. Natural gas is used by several energy-intensive industries, such as glassmakers and steelmakers, which already face higher costs and write-backs that have helped slow the European economy.

For electricity production, natural gas is a “wobbly” energy source when renewables such as wind and solar are producing less electricity due to unpredictable weather, and when electricity usage surges during cold or hot weather, such as last weekend’s heat wave stimulus a record high in Europe.

Currently, underground storage rooms in Europe are 57% full.The latest proposal from the European Commission is for each country to reach 80% by November 1, while Germany Targets have been set to reach 80% by 1 October and 90% by 1 November.

Analysts at Bruegel think tank in Brussels warned that “Bulgaria, Hungary and Romania will not be satisfied EU 80% of the target, if they continue at their current pace,” and “GermanyAustria and Slovakia will discover if natural gas comes from Russia was blocked. “

what are you doing?

This EUbefore the war, 40% of its natural gas came from Russia, has outlined plans to cut imports by two-thirds by the end of the year and completely phase out Russian gas by 2027. The European Union has said it will block Russian coal starting in August and most Russian oil for six months.

The goal is to reduce $850 million per day Russia Has been profiting from the sale of oil and gas to Europe to prevent its wars from being funded Ukraine.

European governments and utilities bought expensive liquefied natural gas (LNG) from the U.S., shipped by ship, not by pipeline Russia and generally cheaper.But the war has pushed up energy prices, fueling record inflation in Europe and helping keep incomes high Russia.

Efforts are underway to secure more pipeline gas from Norway and Azerbaijan, while accelerated rollout of renewables and conservation are expected to play a smaller role. GermanyCompanies without LNG import terminals are bringing in four floating terminals, two of which should be operational this year.

Despite the focus on renewable energy, the crisis is pushing countries back to using fossil fuels. Germany Despite plans to exit coal entirely by 2030, the company is rushing through legislation to restart coal-fired power plants as a temporary patch.

Deputy principal Robert Harbeck said the switch to coal was “bitter” but “absolutely necessary under the circumstances”. The government plans to take steps to encourage industry and utilities to use less natural gas. Habeck also urged Germans to conserve energy.

“The use of gas has to be reduced further so that more gas can be stored, otherwise in winter it will be tight,” he said.

The Dutch government has said it will allow coal-fired power stations to run at full capacity again to save gas that would otherwise be burned to generate electricity.

Despite all these measures, gas security in Europe remains fragile. LNG export terminals in energy-producing countries such as the United States and Qatar are running at full speed, meaning Europe is bidding against Asia for limited supplies.

In addition, an explosion and fire at an export terminal in Freeport, Texas, took one-fifth of U.S. export capacity offline within months, sending another shudder to the natural gas market. Rystad Energy said most of the terminal’s exports were destined for Europe.

“The situation in the European gas market is further escalating,” said Carsten Fritsch, commodities analyst at Commerzbank Research, pointing to the explosion and planned north creek 1 This will mean that no gas will flow through the pipes between July 11th and 21st. “As a result, gas inventories, which are much needed for the winter, may falter” and prices could be higher.

what is Russiagame?

Gazprom says it must pass north creek 1 Because Western sanctions have grounded a critical piece of equipment in Canada, it has been brought there for maintenance. European governments don’t buy it, saying natural gas cuts are political.

Gazprom’s move led to a surge in natural gas prices after falling after the winter heating season.This increases revenue Russia at a time when it is under pressure from Western economic sanctions and increases European pressure because it gives Ukraine Political and military support.

Gazprom’s move can also be seen as a push back against Western sanctions and a deterrent to the imposition of further penalties. Larger gas users have noticed, and just like smaller gas users, they are not immune to possible production outages.

Germany and Italy Their supplies were cut as their leader met with French President Emmanuel Macron in Kyiv with President Vladimir Zelensky and returned EU candidacy Ukraine.

Will Europeans see the lights go out or freeze this winter?

This is unlikely because EU The law requires the government to ration gas to industry so that homes, schools and hospitals are not affected. Countries with gas shortages can also turn to other countries that may be in better shape, but that depends on adequate pipeline connections.

The negative impact of rationing will be industrial cuts and shutdowns, which could take a toll on jobs and growth in an economy already squeezed by high inflation and fears of a global slowdown as central banks raise interest rates.

Meanwhile, a complete shutdown from March 7 could send gas prices soaring to a record 206 euros per megawatt-hour, further pushing up inflation. Early 2021, before Russia Assemble troops at the border Ukrainethe spot gas cost is around 19 EUR per MWh.

Copyright © 2022 The Washington Times, LLC.

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