The latest speculation about Russia’s hypothetical invasion of Ukraine and potential sanctions pledged by Western countries in response has raised serious concerns about energy security in Europe, which has already been shaken by the pandemic and the Covid-related supply crunch stretching across each and every sector of the region’s economy.
Europe is going through a severe energy crisis, with surging prices for heating and electricity placing an intolerable burden on households and businesses.
Russian gas supplies account for roughly 40% of Europe’s consumption, with any disruption of deliveries expected to aggravate the current situation and cause spikes in energy prices.
Though major energy producers like Qatar or Azerbaijan have pledged emergency gas supplies to the region, the volumes shipped by Russia are reportedly hard to replace without affecting other big consumers across the world, especially in Asia, the world’s fastest-growing market.
“Europe has no alternative to Russian gas,” BCS Global Markets Senior Analyst Ron Smith said as quoted by Bloomberg. “You would have to divert half of the LNG that Asia consumes in order to replace Gazprom PJSC. And what would that mean? That would mean massive energy shortages all across Asia, you would export Europe’s energy crisis to Asia,” the expert added.
According to Qatar’s energy minister, Saad Al-Kaabi, the volumes of gas the EU needs can’t be replaced by any one supplier unilaterally without disturbing deliveries to other regions.
The official stressed the importance of fulfilling obligations under long-term contracts with existing customers, and said strengthening European energy security would inevitably take collective efforts from a number of gas producers.
Increased competition for liquefied natural gas (LNG) is expected to keep prices high, according to the Brussels-based Bruegel think tank, as cited by the agency. The researchers say that Europe would have to curb demand in case of any prolonged disruption lasting through the next two winters.
Europe currently relies on the LNG that’s been arriving on its shores, helping to ease high prices, but Asia is expected to regain its spot as a premium export market for US cargoes of the fuel as early as May, according to BloombergNEF calculations.
“This idea that ‘we will fill the gap with LNG’ – no, you can’t. It’s physically impossible to do, there’s not enough LNG in the world to do that,” Smith told the agency.
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