For the first time in modern history, Europe is preparing for winter without Russian gas. The corresponding statement was made by Thierry Breton, European Commissioner for the Internal Market, on 20 July.
“We made a decision: we are preparing for winter without Russian gas. “To get through this winter and possibly the next, EU countries may extend the operation of their nuclear or coal power plants,” he said.
His words came against the backdrop of reports from Canada regarding the rotation of a Siemens turbine for Nord Stream 1. The unit was under repair there, but there were problems with its return to Gazprom due to anti-Russian sanctions. Now the gas pipeline is under scheduled maintenance – fuel will not be supplied until at least July 21. Prior to this, pumping through the pipe was reduced by 40%.
A day ago, Ottawa announced that it was sending a turbine to pump gas into Germany, bypassing its own sanctions. However, Gazprom said Wednesday that it has not received official documents from Siemens allowing it to supply a turbine for the Portovaya compressor station. They stressed that turbine rotation and warranty for repair of other units also directly affect the flow through Nord Stream 1.
Ursula von der Leyen, head of the European Commission, assured that the turbine is on its way, that it will return on time, and that the Russian side has no reason not to restart gas supplies.
At the same time, Russian President Vladimir Putin said on July 19 that Gazprom will continue to fulfill all its obligations, so foreign buyers of fuel need not worry.
The idea is not new
Reducing gas dependence on Russia is not a new issue for Europe. It started to be discussed long before the special operations in Ukraine and the sanctions that followed. The phasing out of Russian gas was actively discussed by Brussels in 2020-2021, especially on the ground of the “green agenda” and zero carbon footprint strategy: by 2050, the EU wants to completely switch its economy to clean energy.
However, even Germany, the alliance’s most progressive and robust economy, has admitted that a complete rejection of greenhouse gas emissions by 2050 is likely impossible. First of all, due to the high cost and instability of renewable energy sources (windmills, solar and tidal energy). Even before leaving, former Chancellor Angela Merkel stated that the German economy would be heavily dependent on hydrocarbon (primarily gas) supplies from Russia until at least 2035.
For the transition period, Europeans want to replace Russian pipeline gas with more expensive liquefied gas from the US and the Middle East. However, these prospects are very dubious – the main LNG suppliers in the world do not have free volumes to compensate for supplies from Russia. In 2020, Gazprom delivered more than 220 billion cubic meters of fuel to Europe, the largest buyers were Germany, the Netherlands and Italy. The first two countries also participate in the resale of Russian gas.
Many European politicians speak without enthusiasm about the rejection of Russian gas, especially from countries where the economy depends almost entirely on it. In April, Hungarian Prime Minister Viktor Orban called the EU’s desire to stop buying gas from Moscow and switch to expensive liquefied gas as absurd.
“This proposal itself is absurd, as many countries do not have access to LNG terminals. And without resources from Russia, there will be no energy at all in Hungary,” he said.
will they freeze
Now Europeans have two pressing questions – how to withstand the abnormal heat, for which weather forecasters predict severe frosts, and how to survive the coming winter. The fight against the July heat also has a “gas” tone: Despite the weather, politicians are urging Europeans to save electricity, turn off air conditioners, turn off the power of refrigerators and drink more water.
There are also many tips for the upcoming winter. In the early spring, EU officials proposed lowering temperature limits to use less gas when heating homes. They produce instructional videos for consumers that teach how to seal windows with foil (to conserve heat) and also recommend cuddling with cats. There have been calls for a return to heating homes with dead wood in Eastern European countries.
The most panic is in Germany, whose industry is almost half dependent on Russian gas. On the eve, German Economy Minister Robert Habek called for preparing for a “nightmare scenario” if gas supplies from Russia are cut completely. Bavarian Prime Minister Markus Soeder said the country would face an “economic heart attack” if Russian fuel was rejected.
what will be the prices
The Germans have already been officially told: even if they start taking a hot shower instead of a bath, reduce the heating in their house to 20 degrees, and do not open the windows, heat prices will still increase by 200-300 percent. French media also write that heating bills will increase by one hundred percent.
To moderate this effect somewhat, the EU plans to adopt a plan to reduce the gas consumption of bloc member states: 5-15% relative to the consumption level of the last five years. If this document is formally approved at a special meeting of energy ministers on July 26, Brussels will be able to require EU members to use less gas from storage facilities from next Wednesday.
National Energy Security Fund analyst Igor Yushkov said in an interview with socialbites.ca last week that under the worst-case scenario for Europe, the foreign exchange price of gas could rise above the December high of $2,000 a thousand cubic meters. meters already in 2022 (floated around $ 1680 at 15.00 Moscow time on July 20).
If the EU pulls out of gas, higher gas prices will partially offset Russia’s losses. In the short term, Gazprom will suffer losses as gas supply routes in Asia are not as strong as those in Europe – Moscow will technically not be able to pump any more fuel to China and third countries. However, this problem can be solved within a two to four year horizon with the development of LNG projects in Siberia and the Far East. Vadim Ponkratov from the Finance University affiliated to the Government of the Russian Federation also pointed out that Russia should direct the excess fuel to the development of its own petrochemical industry, especially in the context of sanctions.