Europe faces an “unprecedented risk” of gas shortages, the International Energy Agency warns. At the same time, European countries have to compete for liquefied gas with Asian countries, depriving some of them of energy sources.
According to the International Energy Agency, Europe will face “unprecedented risks” to its natural gas supplies this winter after much of Russia’s “blue gold” supplies were restricted. Europeans also face the prospect of competing with Asia for the already scarce and expensive liquefied gas that is shipped by sea.
As the Associated Press notes, the Paris-based Inter-national Energy Agency (IEA) said in its quarterly gas report released on Mo-nday that European Union countries would have to cut gas consumption by 13% over the winter in the event of a complete shutdown of Russia due to the conflict on Ukraine. The group said much of this reduction should be attributable to consumer behavior, such as lowering thermostats by 1 degree and adjusting boiler temperatures, as well as mothballing industrial and utilities facilities.
On Friday, the EU agreed to make it mandatory to reduce electricity consumption by at least 5% during peak hours.
According to the Associated Press, only a “trickle” of Russian gas is still flowing through pipelines through Ukraine to Slovakia and across the Black Sea through Turkey to Bulgaria. Two other routes along the bottom of the Baltic Sea to Germany and through Belarus and Poland are closed.
Another hazard the study cites is a cold snap at the end of winter, which is particularly challenging because underground gas reserves flow more slowly at the end of the season due to less gas and lower pressure in storage caverns. The EU has already filled its storage facilities to 88%, ahead of its target of 80% before winter. The IEA has suggested that 90% would be needed in a Russian cut-off scenario.
Businesses in Europe have already reduced their use of natural gas, sometimes by simply moving away from energy-intensive activities such as steel and fertilizer production, while smaller businesses such as bakeries are experiencing serious problems with their costs.
High prices for gas, which is used to heat homes, generate electricity and a variety of industrial processes, have led to record consumer inflation of 10% in the 19 EU member states that use the euro, and have severely eroded consumer purchasing power, which economists predict is fraught with recession at the end of this year and the beginning of next.
European governments and utilities are trying to fill much of Russia’s gas shortfall by buying expensive supplies of liquefied natural gas, or LNG, which is shipped by sea from countries like the US and Qatar, and by boosting supplies via pipelines from Norway and Azerbaijan.
The goal, according to the Associated Press, is to prevent storage levels from dropping so much that governments have been forced to ration gas to businesses. According to the IEA, gas reserves must remain above 33% for a safe winter, while levels below that could lead to gas shortages in the event of a late cold snap.
Lower levels will also make it harder for Europe to replenish storage next summer, while higher conservation reserves will help ease extremely high prices, the Associated Press stresses.
Demand for liquefied gas has driven up prices and reduced supply to a point that poorer Asian countries cannot afford. Bangladesh is experiencing massive power outages, while Pakistan is experiencing continuous power outages and reduced working hours have been introduced in shops and factories to save energy.
“Inter-regional competition in LNG purchases could create additional tensions as additional European needs put more pressure on other buyers, especially in Asia, and conversely, cold weather in Northeast Asia could limit Europe’s access to LNG,” the energy agency said in a statement. .
The gas crisis in Europe has also deprived Asian countries of a limited number of floating regasification terminals that were supposed to play an important role in Southeast Asia’s LNG imports.