Three weeks after the invasion of Ukraine, Russian shelling continues to intensify and cause further devastation to Ukrainian cities, homes, and people’s lives. Ukrainian Infrastructure Minister Oleksander Kubrakov has placed the cost of damages at roughly $10 billion. The invasion has also created the “fastest-growing refugee crisis since World War II” as more than 3 million people have fled Ukraine and sought refuge in other countries.
The Russian invasion has been met with crushing sanctions by the European Union (EU). However, while imposing these penalties, Europe still imports large quantities of Russian gas. Russian gas continues to be untouched by these political developments, but analysts are concerned that Russian president, Vladimir Putin, may counter the sanctions placed on Russia by cutting off the supply of gas to Europe. Should those events unfold, Europe must find other sources to avoid an energy crisis.
Europe’s Reliance on Russian Gas
Russia is the second-largest natural gas producer globally, with production amounting to 693.4 billion cubic meters in 2020. Russia is also the leading natural gas supplier to Europe. Around 40% of Europe’s natural gas is imported from Russia, making European nations disproportionately dependent on Russian producers. For context, 19% of Finland’s total energy consumption in 2020 came from natural gas – all of which was imported from Russia. Similarly, Germany’s gas imports from Russia exceeded 50% of its total natural gas consumption.
There are several reasons behind Europe’s dependence on Russian gas. One is the depletion of the North Sea gas fields, sources that produced natural gas for years from the Netherlands and the United Kingdom. Europe has also minimized its use of some energy sources. In Germany, the Fukushima nuclear disaster in 2011 spurred the country to drastically reduce investments in nuclear energy.
Moreover, as it strives to achieve carbon neutrality by 2050 and cut greenhouse gas emissions by at least 55% by 2030, the EU has reduced its reliance on coal for power generation. This has resulted in more consumption of natural gas, as it is considered to be relatively less harmful than coal, and increasing dependence on Russia, whose gas is abundant, relatively cheap, and easy to deliver.
Europe’s Sanctions on Russia
In response to the invasion of Ukraine, the EU has imposed an array of sanctions on Russia with the goal of “asphyxiating [its] economy,” as stated by Jean-Yves Le Drian, France’s Foreign Affairs Minister. The sanctions include bans on transactions with the Russian Central Bank, the participation or investment in projects co-financed by the Russian Direct Investment Fund, and new investment in the Russian energy sector. The EU also suspended the broadcasting activities of Russia Today and Sputnik, two state-owned news outlets.
Another penalty the EU implemented is barring some Russian banks from accessing the SWIFT international payment system. SWIFT is an important network used to securely send messages about financial services like money transfers. Banning Russian banks from this system would “ensure that [they] are disconnected from the international financial system and harm their ability to operate globally,” asserted the President of the European Commission Ursula von der Leyen.
While attempting to cripple the Russian economy, the EU’s packages did not include sanctions on Russian gas, simply because Europe is vulnerable to and in constant need of it. That is why it seems unlikely that the EU will ban energy imports from Russia. As Bulgarian Prime Minister Kiril Petkov put it, “Bulgaria would support all kinds of measures, because we are really against the war, but these two (oil and gas), maybe we would ask for an exception… We do not have current alternatives right now, we are too dependent.”
What is interesting about what Kiril said is that he did not take into account that Russian gas could also be cut off to Europe by the Russian government in retaliation for the harsh sanctions the EU imposed. Prior to the invasion, Nikolay Zhuravlev, vice-speaker of Russia’s Federation Council, said that excluding the country’s banks from SWIFT was likely, but there are other options to transfer money. In return, European countries “will not receive our goods – oil, gas, metals and other important components of their imports. Do they need it? I am not sure.”
Zhuravlev’s statement can be viewed as a worst-case scenario of Russia’s response to Europe. However, Putin warned that the economic punishments on his country are “akin to an act of war.” This warning shows that Zhuravlev’s scenario could actually become a reality and raises concerns about what Europe will do in case Russian gas supplies are suspended.
Does Europe Have Alternatives?
One option Europe could pursue to keep receiving gas is turning to other supplying countries like Norway, which is a major gas producer. Nonetheless, one month before the invasion, Norwegian prime minister, Jonas Gahr Stoere, made it clear that his country is already exporting gas throughout Europe at maximum capacity, yet that remains insufficient to replace Russian supplies.
Europe could also import electricity or generate power from renewables, hydropower, or other non-gas sources. But that, again, is not enough, partly due to high consumption. In 2018, Europeans’ consumption of electricity was four petawatt-hours, which is almost equivalent to what Latin America, Africa, the Middle East, and Eurasia combined consumed. Consequently, the amount of electricity generated from sources other than gas, which is about 0.152 petawatt-hours, will be small in comparison to what is actually consumed.
Another alternative that can prove effective is importing liquified natural gas (LNG). LNG is formed by cooling natural gas to a liquid and removing some of the compounds it contains. This liquified gas is 600 times smaller in volume and, hence, can be shipped by sea to distant places that natural gas pipelines do not reach.
Europe’s imports of LNG in the first two months of 2022 were dramatically high. That said, there are complexities that come with importing LNG. The demand for LNG from Asia, Latin America, and other parts of the world is high. Supplying countries like the United States and Qatar are already committed to contracts, and their export capacity is at a maximum. For example, because Qatar is tied to long-term contracts with other countries, the amount of gas it can divert to Europe from what it produces is only 10-15%, said Qatar’s Energy Minister Saad al-Kaabi. The significant amount of gas Russia exports to Europe, therefore, cannot be replaced by any country, al-Kaabi added.
African countries have been considered a viable option to get gas from. Countries like Nigeria and Tanzania have ambitions to export their gas to foreign markets. As Tanzanian President Samia Suluhu Hassan expressed, “[w]hether Africa or Europe or America, we are looking for markets. And fortunately, we are working with companies from Europe.”
Although African countries have enormous amounts of natural gas, there are major problems, including political instability and the lack of infrastructure, that hamper their ability to be reliable gas suppliers. For instance, Mozambique has 2.8 trillion cubic meters of natural gas reserves, but there is an ongoing armed conflict in its gas-rich province of Cabo Delgado. Because of the conflict, the work on a $50 billion project has been obstructed. With these problems, it is uncertain whether African countries can fill the gap created by the possible suspension of Russian gas.
The EU Commissioner for Energy, Kadri Simson, stated that Europe is ready to deal with the disruption of the Russian gas supplies. Yet it is clear now that this, unfortunately, is not the case. Russian gas is indispensable for Europe and replacing it is certainly difficult.
When Russia annexed Crimea from Ukraine in 2014, it continued to provide gas to Europe, despite the sanctions it faced. But there is no guarantee that history will repeat itself. Considering how robust the sanctions on Russia are this time, cutting off gas to Europe remains a distinct possibility. That is why European countries should devote more effort to securing power supplies, preferably through renewables, to avoid a possible energy crisis.
Edited by Majeed Malhas