The energy crisis of recent months and the tensions over Ukraine have reignited the question of relations between the West and Russia. A question which, as far as the European Union (and beyond), revolves mainly around gas. Yes, because despite repeated calls to reduce dependence on Moscow, Russian gas still accounts for 38% of gas passing through pipelines across the EU. And we find roughly the same share in Italy, among the Member States most exposed to turbulence on the former Soviet front. Vladimir Putin knows this and has always played this card on the geopolitical chessboard, as he did for example on Thursday January 27 when he attended an online meeting with some big names in the Italian economy (from Barilla to Enel) in which he proposed gas cost cuts for our country. On the other hand, the United States has announced that it is working to provide an alternative to Europe with regard to the Moscow fields. Hence the question hovering in Brussels as in the rest of the Old Continent: can the EU do without Russian gas?
Let’s start from the existing alternatives. In 2021, 22% of imported gas came from Norway, followed by Algeria and Azerbaijan, both with a share of around 9%. The problem, as we saw last year, is that these countries “do not have additional production capacity”, Explain to AFP Thierry Bros, specialist in the European gas market at Sciences Po Paris. To think of resorting to an increase in production on the spot is pure fantasy: the Netherlands did it, for example, in its Groeningen field, causing small earthquakes which triggered the anger of the inhabitants.
This is why the only alternative that has a chance of being considered is the import of liquefied natural gas, LNG, which currently accounts for 18% of EU gas supplies. US President Joe Biden has made it known that his administration is working in this direction, both to take away from Putin his main weapon of blackmail against the EU and European NATO countries, his direct productive interest (the United States are among the world’s LNG giants). Additionally, the White House chief will welcome Tamim bin Hamad Al Thani, the Sheikh of Qatar, who together with Australia completes the trio of global LNG giants. “It is mainly these three countries that have the flexibility to produce more or to switch to Europe for volumes that traditionally go to other markets”, explains Vincent Demoury, head of the international professional association of GIIGNL gas importers.
LNG is only a partial solution
Biden’s promises do not convince industry experts, however. “We cannot replace all Russian gas with LNG”, sums up Thierry Bros. The reason, writes AFP, is that ports and regasification plants in Europe (including the UK) can only process 19 billion cubic meters per month. They currently process around 8 billion cubic meters per month, which means they could need an additional 11 billion cubic meters per month. This would offset most of the 14 billion cubic meters per month that Europe currently receives from Russia.
The problem is that the gas market is very complex, both from an infrastructural and political point of view. We explain it report recently published by the think tank Bruegel. The study starts from the Iberian Peninsula, which is the EU’s main hub for LNG import terminals, particularly Spain. The region “can import 40 TWh per month” of LNG, but “can only consume 30 TWh”. The rest can be sent to the rest of Europe, but at the rate of 5 TWh per month, or about 0.4 billion cubic meters. Then there is the passage through France, which involves other bottlenecks. Without forgetting that “the Central and Eastern European pipeline network is designed to transport imports from the East to end consumers. Despite investments in reverse flow capacity and new pipelines – writes Bruegel – if too much gas came from the West, bottlenecks in the pipelines could prevent sufficient deliveries to the easternmost parts of the EU or to Ukraine”.
Finally, continues the think tank, “what is technically feasible may not be politically so”. If Russia were to turn off the gas taps, “there is a risk that better-supplied countries will not be willing to share scarce gas resources with worse-off countries. This risk is amplified by the inability to predict the duration and severity of any shortages when, in a worst-case scenario, infrastructure constraints would already necessitate anticipated volume movements across borders,” explains Bruegel.
Coal and nuclear
For Bruegel, relying on LNG to compensate for a possible shutdown of Russian gas supplies also comes up against other limits, from the number of ships needed to transport the stocks to Europe, to the knock-on consequences for the rest of the world market. . One could also think of a mix between LNG and other sources, but for the think tank, the only ones that could quickly generate safe energy, given the stocks of rare gases in EU countries, are power plants. coal, with a consequent increase in emissions. of Co2? and the nuclear ones that are closing, namely the plants in Germany and Belgium. Eventualities that would create other problems also of a political nature.
Another option is to act on the demand side. Plans can be made which “could include the closure of non-critical industries in an emergency scenario”. At the same time, “the reduction of heating in tertiary buildings, offices and housing could also be imposed”, and finance incentives for households to promote energy savings. But even then, the economic and political repercussions could be serious.
But would Russia completely cut off supplies?
At this point, another question arises: but could Russia really completely cut off the gas supply in the event of strong EU sanctions against a possible invasion of Ukraine? “A complete suspension of gas exports remains the least likely scenario,” say analysts at Eurasia Group. Such a move “would pose serious long-term risks to Russia’s financial stability and political influence in Europe, as the EU would likely respond by aggressively diversifying its energy supplies”, they added. According to Professor Bros, “the Russians have no interest in stopping deliveries completely”. In addition to Moscow’s interest in bringing money into its coffers, maintaining certain deliveries “would allow it to create divisions in Europe” since it could continue to supply certain countries such as Germany by cutting off others such as Poland and Lithuania.
In conclusion, therefore, experts agree that it is unlikely that Russian gas will suddenly stop arriving in Europe. At the same time, Europe is highly unlikely to give up relying entirely on other sources, such as LNG. On the contrary, what is at stake here is whether and how to reduce dependence on Moscow not immediately, but in the medium and long term. France, for example, would have a solution, namely the increase in nuclear production, which is attracting more and more proselytes in Europe (and in Italy). Germany, on the other hand, is closing its factories, waiting to double gas flows from Russia with Nord Stream 2. In the background, the European Commission and its taxonomy, the document which should really clarify the direction that the EU.