Russian gas supplies to the EU will be sharply reduced

To a record low, Russia will reduce gas supplies to Europe in the coming days.

According to BB.LV, one of the two gas pipelines currently in use, through Turkey, will be put on prophylaxis on Monday. Transit through Ukraine will remain the only route.

The gas war between the Kremlin and Europe began in approximately the same way last fall, when Gazprom shut off the main gas pipeline in EU “Nord Stream” for prevention, and then refused to turn it back on. In recent months, the EU has received Russian pipeline gas only through Turkey and Ukraine.

So far, Russian gas has not fallen under large-scale European sanctions against the Russian Federation for the war in Ukraine, since by the time the EU invaded, it was sitting tightly on the Russian gas needle – Europe covered 40% of its gas needs with cheap Russian pipeline supplies.

A year and a half has passed, and some EU member states are proposing to permanently abandon the gas pipelines that Russia has shut down. This proposal was discussed at the last meeting of the G7, but has not yet received unanimous support.

The reason for this proposal was the fact that over the past winter Europe got used to the new reality, in which it no longer depends on energy supplies from Russia, and does not intend to return to the past.

In the future, the EU is preparing to almost completely abandon gas, not only Russian, but also the one that came to replace American and Qatari. Therefore, it almost does not sign long-term agreements on the purchase of liquefied gas, preferring to buy on the spot market at current prices, and relies on renewable and nuclear energy. The International Energy Agency (IEA) notes:

“The surge in prices killed industrial demand and forced the energy industry to switch to coal. Due to energy efficiency and the development of renewable energy, the decline in gas demand has become structurally irreversible.”

Undoubtedly, Europe has not been without losses. The industrial motor of the EU – Germany – has been acting up for months. But the Russian Federation suffers perhaps more. In 2022, gas production in the country decreased by 90 billion cubic meters, or 12%, and in 2023 it will decrease by another 50 billion. That is, according to IEA estimates, Russia will lose almost 20% of gas production in two years.

Can Putin go for broke, try to turn the tide of the gas war in one blow and turn off gas to Europe? The IEA warns that in this case, the EU will not be able to replace Russian gas, even with the current level of supplies, the energy crisis in Europe will worsen. The latest report says:

“If Russia keeps the volume of pipeline gas pumped to the European Union at the level of the first quarter of this year, in general, in 2023, supplies to the developed EU countries will decrease by 45% (more than 35 billion cubic meters) compared to 2022. LNG supply on the world market, is expected to grow by only 4% (about 20 billion cubic meters) in 2023. This is not enough to replace the expected reduction in pipeline gas supplies from Russia to Europe.”

The IEA also points to other potential problems: cold winters or hot summers, increased demand in Asia and accidents. Each of them is capable of leading to a new jump in gas prices and a new round of Russia’s energy war against the West.

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