Before the Russian invasion of Ukraine, the explosion in European gas prices and the energy paradigm shift in the minds of European elites, Russia had historically been the largest supplier of natural gas to Europe. Back in January 2021 Russia supplied around 40% of the gas consumed in Europe. As Spain’s Energy Transition Minister Teresa Ribera recently stated, this proportion is now less than 10%.
Oil and Gas
The global economic situation is pushing industrially developed countries – primarily EU countries, but also India – to look for alternative sources of oil. The situation is aggravated by the fact that in the short term, the US is concentrating its efforts on holding down domestic hydrocarbon prices and will not increase gas supplies to global markets until at least December 2022, and possibly later.
The cruel romance between Russian gas suppliers and European consumers reached its peak this year. In early September, just ahead of the winter, Russia’s state-owned Gazprom shut down the Nord Stream 1 pipeline, which carries around a third of all Russian gas exports to the EU (almost 15% of the EU’s total gas imports).
The evolving energy crisis in Europe – brought about in large part by the need to introduce tough sanctions against Russia, which has unleashed war in Ukraine – is beginning to acquire a more persistent nature. Moreover, this is having extremely negative long-term consequences – first and foremost for Germany, Europe’s largest economy.
Former German Chancellor Angela Merkel has called the Russia–Ukraine war that flared up at the end of February “a profound turning point in the history of Europe.” This is largely linked to the fact that the conflict has triggered a swift U-turn in the energy policy of Germany, which had been building close and interdependent relations with Russia in the energy supply field for several decades. It appears that Germany is ready to bid goodbye to Russian piped gas and replace it with liquefied gas (LNG) from overseas by building its own LNG infrastructure.
Renewed discussion of removing sanctions from Iran’s oil industry is becoming one of the most important issues on the current agenda. The subject reflects a strategy whereby the United States and the EU are looking for solutions to the problem of an oil shortage in the here and now: they are under time pressure given the possibility of a full-scale oil embargo against Russia.
The conflict that flared up at the end of February between Russia and Ukraine has been a massive shock to the entire political landscape of the European Union. Its seismic waves are continuing to reverberate in all its economies’ markets and industries.
With the warmer months when gas storage facilities are usually filled for the next winter approaching, Europe is struggling to find ways to replace Russian gas with potential alternatives. Attention is naturally turning to Norway, the second largest gas supplier to the continent.
Spot prices for gas in Europe reached a historical high on 21 December 2021, exceeding $2,000 per thousand cubic metres of gas for the first time. By the end of January 2022, the price of gas had experienced a double downward correction. The situation in the European gas market remains complex however. According to Emily […]
The situation that has developed around Nord Stream 2 in recent months has become so confused that one almost wonders whether the pipeline exists at all. European politicians mention the project so often though, that one would think it had been operating and pumping billions of cubic metres a year to the European Union for […]
Groningen is one of the largest gas fields in the world, and was a source of prosperity for the Netherlands for over half a century. For several years now, however, it has been nothing but a serious headache for the Dutch government. Coronavirus and failures in energy transformation could hinder the field’s decommissioning. Why the […]