IEA Chief Says Russia Is Moving To Cut All Gas Supplies To Europe By Winter, Urges Them To Prepare For Severe Energy Crisis

by India Infrahub - Jun 23, 2022 09:15 AM +05:30 IST
IEA Chief Says Russia Is Moving To Cut All Gas Supplies To Europe By Winter, Urges Them To Prepare For Severe Energy Crisis Europe's dependence on Russian energy and Putin's options
Snapshot
  • Europe needs to start preparing immediately to address the severe energy crisis it will face if Russia cuts all gas supplies to the region this winter, Fatih Birol, the head of the International Energy Agency, has said.

Europe needs to start preparing immediately to address the severe energy crisis it will face if Russia cuts all gas supplies to the region this winter, Fatih Birol, the head of the International Energy Agency, has said.

"Europe should be ready in case Russian gas is completely cut off," he said in an interview with the Financial Times. "The nearer we are coming to winter, the more we understand Russia's intentions.

He urged governments in Europe to work on energy conservation measures and to keep nuclear power plants open.

Birol warned that Russia's decision to reduce gas supplies to Germany and Italy last week is a precursor to further cuts designed to prevent the filling of storage facilities in preparation for winter, as Moscow seeks to leverage its control of gas supplies to gain a geopolitical advantage.

Birol said emergency measures taken so far by European governments to reduce energy demand have been inadequate.

Any attempt by European nations to reduce reliance on Russian gas supplies would mean burning more coal and keeping nuclear plants going.

Russian Gas Major Gazprom Cuts Supplies To Germany And Italy

Last week, state-owned Russian gas giant Gazprom announced a 40% reduction in natural gas deliveries to Germany via the Nord Stream pipeline. It blamed German engineering giant Siemens for failing to restore key turbines "on time".

Gazprom deploys Siemens' turbines at Nord Stream's Portovaya compressor station on Russia's Baltic Sea coast to maintain the necessary pressure in the system to pump gas. Siemens has withdrawn its services and maintenance support for Russia to comply with European sanctions against the country following Russia's invasion of Ukraine.

The announcement to reduce supplies came just weeks before the offshore pipeline is scheduled to undergo its annual maintenance work, and Gazprom did not specify how long flows will be reduced.

Natural gas accounted for nearly 27 percent of Germany’s total energy consumption in 2021. While Germany has managed to quickly reduce its dependence on Russian gas since the Ukraine War, from around 55 percent in February to around 35 in May 2022. However, it still faces the significant challenge of replacing the remaining share with alternative sources. As of mid-June 2022, the country’s gas storages were filled to 55 percent of capacity. A new law obliges storage operators to fill their facilities to at least 90 percent of capacity by November and retain at least 40 percent by February.

Last week, Gazprom also reduced its gas supply to Italy by 15 per cent. Italian energy major Eni said that Gazprom has not provided any explanation for the shortfall in the supply.

In 2021, Italy sourced 40% of its gas imports from Russia. It is the second-largest European buyer of Russian gas after Germany.

Italian Prime Minister Mario Draghi was initially opposed to paying for Russian gas in rubles, after Russian President Vladimir Putin threatened to shut off gas to "unfriendly" countries if they refused to pay for gas supplies. However, he relented later and agreed to roubles payment mechanism.

Europe's benchmark gas price is trading at about €127 (£109) per megawatt hour – up more than 300% from the previous year.

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