Home Gas effect Russia could completely cut off natural gas supply to Europe (IEA)

Russia could completely cut off natural gas supply to Europe (IEA)

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  • Europe should be ready for Russia to completely cut off all natural gas exports, the IEA chief said.
  • “The closer we get to winter, the more we understand Russia’s intentions,” he said.
  • Governments should look for ways to reduce demand for fossil fuels and invest in clean energy, he added.

Europe must be prepared for Russia to completely cut off supplies to the region this winter, the International Energy Agency told FinancialTimes.

“The closer we get to winter, the more we understand Russia’s intentions,” said IEA director Faith Birol. “Europe should be ready in case Russian gas is completely cut off,” he added.

Russia has wreaked havoc in several EU countries after recently shut off gas supply due to equipment delay in Canada. The Russian giant Gazpromfor example, cut natural gas supply through the Nord Stream gas pipeline to Germany by 40% earlier this month.

Against this backdrop, benchmark European natural gas futures were trading Wednesday at their highest since March at around 130 euros per megawatt-hour ($136), having nearly doubled in the past 12 months.

Russia’s move subsequently forced countries like Germany, Italy and the Netherlands to draw up contingency plans to switch to coal for power generation in the event of a drop in supply in natural gas. To this end, Germany and Austria have taken the decision to light the old coal-fired power stations out of necessity.

“It’s bitter, but it is essential in this situation to reduce gas consumption,” said Robert Habeck, Minister of Economy and senior Green Party official, in a recent statement.

Meanwhile, Denmark said natural gas would be rationed so consumers could keep warm in the winter.

Europe depends on Russia for 40% of its natural gas. Its leaders are preparing to phase out crude oil and coal imports this year, but have no such plans for gas imports.

Although Russia has cited logistical blockages as the reason for the decline in exports, Birol said there may be an ulterior motive at work as winter approaches.

“I think the cuts are to prevent Europe from filling up storage and to increase Russia’s influence in the winter months,” he said. He noted, however, that the decision by EU countries to rely on coal as a back-up would be “temporary” and help preserve gas supplies during the winter months.

“I think there will be more and deeper demand measures [taken by governments in Europe] as winter approaches,” he said. This means that European countries “should consider postponing closures [of nuclear power plants] as long as the security conditions are there,” Birol said. He also urged governments to invest more in clean energy to reduce demand for fossil fuels.

“Unless governments sit in the driver’s seat and mobilize significant funds to create a clean energy transition, we will face challenges.


volatility

in energy,” he said. Such a view was echoed by US Treasury Secretary Janet Yellen, who recently called on lawmakers to go green as gasoline prices soar in the United States.