As Russia’s invasion of Ukraine plunges Europe into uncertainty, European Commission President Ursula von der Leyen expressed confidence in the EU’s resilience, including in energy matters, at a press conference with European Council President Charles Michel and NATO Secretary General Jens Stoltenberg on Thursday 24 February.
“We have been working for weeks to prepare for the worst (including) making sure we can be independent of any kind of pressure from Russian gas suppliers. We have reached this stage”, she said.
On 16 February, the President told the European Parliament that the EU is in a position to do without Russian gas by the end of the winter (see EUROPE 12892/30).
In recent weeks, the Commission has increased contacts with other gas and liquefied natural gas (LNG) suppliers in order to prepare for all scenarios (see EUROPE 12887/11), including a complete cut-off of Russian supplies - which currently account for around 40% of EU fossil gas imports.
Despite these new diversification efforts, there are concerns about the EU’s exposure to the possibility of the Kremlin using gas more as a geopolitical weapon.
“It is very likely that the EU will be able to secure additional temporary supplies which, together with existing stocks, could see it through the winter, but the question is how sustainable a substitute this redirection could be, if at all, for full Russian deliveries. And I personally have a lot of doubts on the subject, particularly because of the available infrastructure for LNG supply”, Adel El Gammal, an expert in energy geopolitics, professor at the ULB Polytechnic and secretary general of the European Energy Research Alliance (EERA), told us.
The problem of infrastructures was also raised on Thursday by the president of TotalEnergies, Patrick Pouyannée, during a speech to the forum of the National Federation of Public Works (FNTP).
“(The gas pipes) are all full at the moment and there are not enough terminals in Europe to regasify liquefied gas to replace the 40% of Russian gas”, he said.
In addition to the issue of infrastructure, Mr El Gammal pointed to the problem of LNG supply: “We know that Asia is a very large consumer of LNG and that China is prepared to pay a high price to keep its industry going. It is therefore not certain that there is sufficient availability in the LNG market”.
What are the possible outcomes?
The Commission, for its part, has informed us that it currently has no indication of any interruption in supply.
Austrian oil and gas company OMV said it was receiving Russian gas deliveries in accordance with contractual provisions.
However, this information was provided prior to the adoption of a sanctions package by the EU.
Is the scenario of a complete halt to Russian deliveries therefore plausible?
According to Mr El Gammal, this scenario is not impossible in the event of a stalemate and a worsening of the conflict, but remains “very unlikely” for two main reasons.
The first is that, despite Russia’s foreign exchange reserves, the sale of hydrocarbons to Europe is an extremely important source of revenue for Russia. “About one third of the Russian economy is based on oil and gas production and Europe accounts for about 70% of its export market”, the expert said.
Secondly, a complete cut-off of supplies to the EU “would completely undermine Russia’s credibility as a reliable energy supplier to the rest of the world”.
Adding, “It should also be noted that Russia would not be able to redirect its gas supplies to other buyers overnight. LNG requires very heavy infrastructure and the construction of new pipelines translates into huge and very long projects”.
In El Gammal’s view, two other scenarios are more likely.
The first is the gradual, but not total, reduction of Russian gas supplies to the EU, “even perhaps below Gazprom’s contractual obligations”. “Russia could thus increase the pressure on the EU, without appearing to be in breach of contract, because this is always difficult to prove, given the opacity and complexity of contracts”, he told EUROPE.
The second would consist of temporary cuts, as Moscow did in 2009 in Ukraine, which would allow Russia to “increase the pressure on the European bloc in terms of energy, and at a lower cost, as these cuts would last a few days”.
Thierry Bros, a professor at Sciences Po Paris and an energy expert, does not believe in a total halt to Russian gas deliveries to the EU either: “Not only would Russia lose the rent it earns from these deliveries, but this rent would also go to competitors”.
He believes it is more likely that Moscow will reduce its gas volumes to Europe. Russia would then become “in a position to choose to whom it wants to send them and thus create further dissension within the EU, deciding, for example, to send contracted volumes to Hungary but not to Poland, and also to let some countries choose, such as Germany, for example, depending on the position Berlin will take on Nord Stream 2”.
Mr El Gammal, however, believes that this scenario of reducing supplies only to certain EU countries is “very unlikely”, as Europe would implement solidarity mechanisms between Member States fairly quickly, “which would in a way cushion the shock for the Russian gas-consuming states directly affected, such as the Czech Republic, Slovakia, Finland, Germany and Poland”.
Mr Bros does not share this view. “The principle of European solidarity works very well on paper, but I’m not sure that a few weeks before the French presidential elections, we’re going to shut down industries in France to allow Germans to heat their homes”, he told EUROPE. (Original version in French by Damien Genicot)