Page 5 - FSUOGM Week 10 2022

FSUOGM COMMENTARY FSUOGM

EU vows to cut Russian

gas supply by two

thirds within a year

The EU has announced an ambitious plan for phasing
out Russian gas imports quickly, while Russia continues

to make threats on disruptions

EU THE EU has announced plans to cut Russian less than 27% full. There is usually more gas in
gas imports by two thirds within a single year in stock at this time of the year, but Europe entered
WHAT: response to Moscow’s actions in Ukraine. the heating season last year with much fewer
The EU plans to reduce Russia is the bloc’s largest gas supplier, meet- reserves than usual, as the impact of the corona-
Russian gas imports by ing around 40% of its gas consumption. In light virus (COVID-19) pandemic on markets meant
two thirds this year. of the Ukrainian conflict, however, the European that there was less incentive over last summer for
Commission has published a plan to replace governments and companies to inject supplies
WHY: 100bn cubic metres of annual Russian supply, into storage.
The bloc wants to reduce which reached 155 bcm in 2021. Furthermore, it
consumption while also is seeking the EU’s reliance on Russian gas com- Russian threats
securing alternative pletely “well before 2030.” While Europe looks to wean itself off Russian
supplies. “The answer to this concern for our security energy, Russia has meanwhile signalled it might
lies in renewable energy and diversification of restrict oil and gas exports in retaliation for
WHAT NEXT: supply,” EU climate policy head Frans Timmer- Western sanctions, including gas volumes via
Russia is meanwhile mans said in a statement. “It’s hard, bloody hard. the Nord Stream 1 pipeline.
signalling it might restrict But it’s possible.” Regarding oil, Europe can more easily find
oil and gas exports in Gas supplies from countries like the US and alternatives to Russian supply, though its vul-
retaliation for Western Qatar could replace more than a third, or 60 bcm, nerability is much greater when it comes to
sanctions. of Russian supply. New wind and solar projects natural gas. North Macedonia, Bosnia and
could replace a further 20 bcm of gas demand Moldova are the most dependent on Russia for
this year, and by tripling capacity by 2030, adding gas, relying on Gazprom for close to 100% of
an extra 480 GW of wind and 420 GW of solar, their supply. But given that these countries are
the commission believes a reduction of 170 bcm outside the EU and have not backed sanctions
of annual consumption could be achieved. against Moscow, they are unlikely to be cut
The Commission adds that if consumers turn off. But others that have turned against Russia
down thermostats by just one degree Celsius, over Ukraine, such as Germany, are vulnerable.
that could save a further 10 bcm, and by 2030, Germany gets almost half of its gas from Gaz-
replacing gas boilers with 30mn heat pumps prom, and without any LNG import capacity,
could save an extra 35 bcm. it could not easily replace this supply. It may be
The proposals follow mounting calls from able to tap extra supply from the Netherlands,
European governments for embargoes to be however, but only if the Dutch government
placed on imports of Russian energy. But these allowed more production from the earth-
calls come at a time when Europe is already in quake-causing Groningen field. Then there
the grip of an acute energy crisis, as a result of is Italy, which gets 46%, Slovakia, which gets
robust demand, global supply constraints and 70%, Bulgaria 77% and Finland 94%, which
low levels of gas in storage. have alternative sources of supply at hand, but
Data published by Gas Infrastructure Europe again, would struggle to find replacements for
shows that EU gas storage facilities are now all the lost Russian volumes.™

Week 10 10•March•2022 www. NEWSBASE .com P5