Gas Supply: Who Could Fill Russia’s Void?

Status: 01/21/2022 06:00 a.m

Who could fill the gap if Russia turns off the gas supply to the Europeans in the event of an escalation of the Ukraine crisis? Norway has already declined. The US wants to deliver more. But is that enough?

By Lothar Gries,

Russia has never used gas or oil as a political tool to blackmail other countries or to assert their interests, say well-meaning energy companies and politicians. In the dispute over Ukraine, however, one gets the impression that Kremlin boss Vladimir Putin has thrown this strategy of his predecessors overboard. In fact, the largest gas storage facility of the Russian government-affiliated Gazprom group in Western Europe in Rehden, Lower Saxony, is practically empty with a level of only six percent. Other reservoirs are only 13 percent full – a historic low in the middle of winter.

Germany is dependent on Russian gas

The Germans don’t have to freeze yet, the power supply is not restricted – because the gas storage facilities supplied by companies from Norway and the Netherlands are still almost half full. But should Russia turn off the gas tap completely in the event of an escalation of the Ukraine conflict, Europe and especially Germany would face a serious problem. With a share of 55 percent, Russia is by far the largest gas supplier in Germany, followed by Norway (30 percent) and the Netherlands (13 percent). This highlights Germany’s dependence on Russian gas.

Who could fill the gap in an emergency? Norway has already declined. Although he cannot speak for the energy companies, Norway’s Prime Minister Jonas Gahr Støre said recently during a visit to the German Chambers of Industry and Commerce (DIHK) in Berlin. “As far as I know, production is currently running at full capacity.” If there are no deliveries from Russia, “we cannot fill the gap.”

US could supply more gas, but…

Now all eyes are on America, also one of the world’s largest producers of natural gas. Apparently, US President Joe Biden wants to protect Europe from possible supply bottlenecks. According to the Reuters agency, the American government has sounded out emergency plans for gas deliveries to Europe with German and European energy companies.

Representatives of the US State Department have spoken to the companies about the possibility of higher delivery volumes, other media also report, citing insiders from industry and government circles. A postponement of maintenance work was discussed in order to keep gas production high. However, the contacted energy companies had explained that a loss of large quantities from Russia would be difficult to replace, referring to the scarce gas supplies worldwide. It is not known which companies have been approached. A spokesman for the US National Security Council declined to comment on the talks. However, he confirmed that contingency planning was underway.

The USA has been the world’s largest exporter of LNG (liquefied natural gas) since December, overtaking Qatar. According to the Bloomberg agency, more than a thousand cargo ships carrying liquid natural gas left the United States last year. Half of it went to Asia, a third to Europe. Nevertheless, there is skepticism as to whether the country could fully compensate for a loss of supplies from Russia.

US shipments are probably not enough

Leonhard Birnbaum, head of the energy giant e.on, doesn’t believe that. In an interview with the Handelsblatt, he said, “the USA cannot compensate for the natural gas from Russia with its liquid gas LNG”. Meanwhile, the EU Commission is trying to calm the situation: The EU natural gas system can cope with high demand and interruptions in supply routes in most parts of Europe, said a Commission spokesman. However, he had to concede that Europe may need “more imports”.

So will there soon be bottlenecks in the gas supply? Energy expert Claudia Wellenreuther from the Hamburg Institute for the World Economy (HWWI) does not expect supply problems with natural gas despite the tense situation. “Not only Germany is dependent on Russian gas, but Russia is also dependent on the proceeds,” she told the dpa news agency. The director of the East European Institute Zois, Gwendolyn Sasse, sees it similarly. According to the expert, Russia would cut itself in the foot by stopping gas deliveries, because Moscow urgently needs the income from gas sales.

Several pipelines supply Europe with gas

So far, the gas supplies have been delivered as ordered. Since Germany gets more than half of the natural gas it needs from Russia, “there is definitely a dependency,” said Wellenreuther. But one can also observe that more natural gas is already being supplied from the USA. The difficulty here is the transport and the capacities. “And there is the question of whether the high demand can really be covered by the USA in the short term,” said Wellenreuther.

The world’s largest natural gas producer, Gazprom, delivers gas to Europe via several routes. The Yamal-Europe pipeline runs from the Yamal Peninsula in Siberia through Russia, Belarus and Poland to Germany. It was completed in 1999 and has been in operation since the mid-2000s. With a capacity of 33 billion cubic meters per year, only a small part of the gas from Russia is transported to Europe via the Yamal-Europe pipeline through Belarus and Poland. The main volumes flow through Ukraine and through the Baltic Sea pipeline Nord Stream 1.

Leave a Comment