View of a gas production plant in the Netherlands
Photo: Photo: AP/dpa/Peter Dejong
The European Union recently covered around 40 percent of its gas requirements through imports from Russia. However, the dependency varies among the member countries – in Germany the rate is even around 55 percent. Should the Ukraine conflict escalate, it cannot be entirely ruled out that these imports will cease – either because of Western sanctions or as a Russian countermeasure.
But what would the consequences be? Russia might probably afford this to some extent. Should the conflict escalate further, the price of oil would also rise significantly, a commodity that Russia might also sell to other countries.
In the EU, on the other hand, the gas storage facilities are already less full than in normal years. This is not least due to Gazprom, because the storage facilities of the Russian group in the EU are only 16 percent full, while other groups are still 44 percent full. An EU document on the current energy market has already said that Gazprom is showing “unusual business practices.”
However, the EU is not entirely unprepared. Since 2005, the capacity to import liquefied natural gas (LNG) has increased by a factor of 3.4. In addition, a second pipeline from Algeria to Spain was opened in 2011 and last year the last section of the “Southern Gas Corridor” was completed, through which the energy resource from Azerbaijan reaches Europe. In addition, the EU has expanded the connections between its member countries so that most of them can now get gas from different directions. The head of the EU Commission, Ursula von der Leyen, therefore said at the Munich Security Conference: “Even if Russia completely interrupts the gas supply, we are on the safe side this winter.” was clear from the start. If the winter had been much colder, the gas storage would be much emptier today.
The good prognosis also does not mean that individual countries might not have problems. In the east of the EU in particular, the infrastructure is still designed so that most of the gas comes via Belarus or Ukraine. A complete supply from Western Europe is not planned. And then gas is not just gas: In north-western Europe, »L-gas« is used and in the rest of Europe »H-gas«, which contains significantly more methane and has a higher energy content. Since the infrastructure is geared to the respective type of gas, one cannot easily be replaced by the other.
If Europe stopped importing Russian gas for several years, the situation would look more dramatic. A study by Belgian think tank Bruegel warns: “On the supply side, while there is some spare import capacity, it would be very expensive at best and physically impossible at worst to completely replace Russian volumes.” LNG. Due to the high price of gas, the liquefaction plants are already running at full capacity, and LNG tankers are also in short supply. In addition, countries in Asia have secured a large part of the available liquid gas through long-term contracts. There is no great untapped potential for pipeline gas either. Only from Algeria and Libya might you get significantly more than today. The Dutch gas field Groningen might theoretically also increase production. Production there is curtailed to prevent earthquakes. However, a ramp-up is likely to meet with local protests.
As a result, demand should fall. According to the Bruegel study, there is the possibility of replacing gas with oil or coal in power generation and of allowing nuclear power plants to run longer. In addition, gas might be saved in industry by suspending production in particularly gas-intensive industries. It is also possible to achieve savings through behavioral changes. But all these measures would “prove painful for some countries”.
But even without restricting the gas supply, there might be problems: “Then there would be a price shock, at least temporarily,” says Clemens Fuest, President of the Ifo Institute in Munich. The TTF Dutch – Europe’s most important gas price is determined at a virtual trading point in the Dutch gas network, where a very high trading volume is recorded – is currently around 75 euros per megawatt hour and is therefore five times higher than in 2020. How strong the price is can rise, showed a short-term price peak in December: At that time, gas cost 166 euros. In addition, a rising gas price also pulls up the electricity price, which is currently three and a half times as high as last year.
In the long term, the EU is focusing on the expansion of renewables, also to reduce dependence on imported gas. “The best solution for more energy security and for low prices is the accelerated implementation of the European Green Deal,” writes the EU in its analysis of the energy market. »Every wind turbine and every solar panel immediately reduces dependence on gas imports.«
