According to the head of the International Energy Agency, Europe must prepare immediately for Russia to cut off all gas exports to the region this winter. He also urged governments to work on reducing demand and keeping nuclear power plants operational.
According to Fatih Birol, recent supply cuts attributed to maintenance work by the Kremlin could be the start of larger cuts designed to prevent storage facilities from filling up in preparation for winter, as Russia seeks to gain leverage over the region.
“Europe should be ready in case Russian gas is completely cut off,” he told the Financial Times. “As winter approaches, we gain a better understanding of Russia’s intentions.”
“I believe the cuts are intended to prevent Europe from filling storage and to increase Russia’s leverage during the winter months.”
EU member states are racing to replenish storage facilities, with Germany hoping to reach 90 percent capacity by November. Its shops are only half-empty.
Member states have also worked to reduce their reliance on Russian fossil fuels by sourcing gas from other countries, including the United States, and hastening the transition to renewable energy, though officials have admitted that the race to phase out Russian oil and gas would mean burning more coal and keeping nuclear plants operational.
According to an Energy Aspects analyst, Europe will be more reliant on Russian gas flows this winter. Birol stated that emergency measures taken by European governments to reduce energy demand were likely insufficient, and he urged countries to work on preserving energy supplies.
“As winter approaches, I believe there will be more and deeper demand measures,” Birol predicted. He added that if Russia reduces its gas exports further, gas supplies may need to be rationed.
In recent weeks, Moscow has reduced or even cut off gas deliveries to several EU countries in response to their decision to sanction Russia for its invasion of Ukraine.
Russian gas supplies to Europe via the Nord Stream 1 pipeline, which runs beneath the Baltic Sea to Germany, have been declining.
Last week, Russia’s state-owned energy company Gazprom announced the second cut in pipeline gas supplies, reducing supplies to 40% of capacity.
Eni, an Italian energy firm, has reported a halving of Gazprom’s gas supplies to Italy, which imports roughly 40% of its gas from Russia. Meanwhile, GRTgaz, the French network operator, reported that France had not received any Russian gas through Germany since the middle of May.
Last week, Kremlin spokesman Dmitry Peskov blamed supply cuts on maintenance issues, referring to earlier comments that Russia was unable to secure the return of equipment sent to Canada for repairs.
The benchmark gas price in Europe is currently around €127 (£109) per megawatt hour, up more than 300 percent from its level a year ago.
According to RBC Europe analysts, options for European policymakers are “in short supply.” It believes that the supply squeeze will benefit gas suppliers Equinor, Shell, and TotalEnergies, as well as coal producer Glencore.
Separately, Ineos Energy signed a 20-year agreement with US company Sempra Infrastructure to supply 1.4 million tonnes of liquefied natural gas from North America. Ineos, owned by billionaire Jim Ratcliffe, plans to trade the gas and use it in its own manufacturing operations. The gas will be supplied by two projects in the Gulf of Mexico.