Europe faces “unprecedented risks” of suffering gas shortages this winter, the International Energy Agency has said. The threat to natural gas supplies comes after Russia cut off most pipeline shipments.
EU countries would need to reduce use by 13% over the winter in case of a complete Russian cut-off amid the war in Ukraine, the International Energy Agency (IEA) warned in its quarterly gas report. It said that consumers would need to cut back by turning down thermostats by one degree and adjusting boiler temperatures.
Industries and utilities in EU countries would also be expected to conserve gas. On Friday, the EU agreed to mandate a reduction in electricity consumption by at least 5% during peak price hours.
The IEA, based in Paris, has predicted that Europe could end up competing with Asia for already scarce and expensive liquid gas, transported by ship. This is in part due to two Russian natural gas pipelines being shut down - under the Baltic Sea to Germany and through Belarus and Poland.
A trickle of Russian gas is still arriving in pipelines through Ukraine to Slovakia and across the Black Sea through Turkey to Bulgaria, AP reports. The IEA also predicted that a late winter cold snap could pose a challenge to gas availability, as underground gas reserves flow more slowly at the end of the season due to less gas and lower pressure in the storage caverns.
The IEA reported that the EU has already filled its gas reserves to 88% capacity, exceeding its goal of reaching 80% ahead of the winter. The body predicted that the EU would need 90% of its gas reserves in a Russian cut-off scenario.
Energy-intensive businesses have already cut down on gas guzzling activity such as making steel and fertiliser. Meanwhile, smaller businesses, such as bakeries, are experiencing crippling energy bill rises.
The high price of gas - used for heating homes, generating electricity, and industrial processes - is feeding into record consumer inflation of 10% in the 19 of the EU member countries using the euro. Economists are predicting a recession at the end of this year and the beginning of 2023 due to consumers losing their purchasing power, AP reports.
To protect against the Russian gas shortfall many European governments and utilities have purchased expensive supplies of liquefied natural gas (LNG), shipped from countries such as the US and Qatar. They have also secured an increased pipeline supply of gas from Norway and Azerbaijan.
For a secure winter Europe’s gas storage must remain above 33% the IEA states. This is essential to prevent storage levels from falling so far that governments must ration gas to businesses.
Lower levels would make it harder for Europe to refill its gas reserves over next summer. Whilst conserving high levels of reserves would help to lower the extremely high prices, AP reports.
European leaders have said the Russian gas shutdown is energy blackmail that puts pressure on governments supporting Ukraine and sanctioning Moscow. Gas supplies from the Nord Stream 1 pipeline running under the Baltic Sea to Germany were halted earlier this month after it and the parallel Nord Stream 2 – built but never operated after Germany refused to certify it – were damaged in underwater explosions that European governments claim were a result of sabotage.
The demand for liquefied gas has driven up prices and tightened supply. This has meant that poorer countries in Asia cannot afford it, causing widespread power blackouts in Bangladesh and rolling blackouts in Pakistan where reduced working hours for shops and factories have been introduced to save electricity.
The IEA states: “Inter-regional competition in LNG procurement may create further tension, as additional European needs would put more pressure on other buyers, especially in Asia, and conversely cold spells in north-east Asia could limit Europe’s access to LNG.”
The gas crisis in Europe has also deprived Asian countries of the limited number of floating regasification terminals - where LNG is heated to return it to its gaseous state. These terminals were expected to play a major role in LNG imports in south-east Asia. Europe has secured 12 of the vessels, with plans for another nine.
