In such a scenario, Europe will have to reduce gas consumption in the winter by 30%, Fatih Birol, executive director of the International Energy Agency, believes.
Natural gas futures in Europe in euros per MWh. Data: ICE Endex, source: Bloomberg
By mid-February, Europe will have to cut gas consumption by 30% if flows from Russia are stopped, says Fatih Birol, executive director of the International Energy Agency. According to him, if Moscow decides to completely stop the supply of blue fuel, then its consumption will have to be sharply reduced, and this is a scenario for which the leaders of the region should prepare.
“Depending on the timing, a complete shutdown of Russian gas supplies to Europe could result in storage levels well below average ahead of winter, putting the EU in a very vulnerable position,” Birol wrote to Bloomberg in an email in response. to questions asked by the agency. “Under the current conditions, I would not rule out a complete cessation of gas exports to Europe from Russia.”
Europe is trying to find suppliers of natural gas to pump it into storage before winter. The situation looks more complicated after Moscow cut gas flows via the Nord Stream gas pipeline to Germany by 60% earlier this month, citing technical problems.
The situation with gas supplies to the EU could worsen if Russia completely cuts off gas supplies to the region in the coming weeks. The bloc’s current forecasts show that the storage occupancy rate should reach 90% by November 1, but the shutdown of supplies from the Russian Federation will bring this figure below 75%.
According to Birol, this will mean „significantly higher” gas prices. Benchmark European gas futures have already more than tripled from last year, according to ICE Endex data.
Birol said Europe should focus on reducing gas consumption by industry and households right now, so that as much gas as possible is sent to storage.
Germany, Europe’s largest economy, is looking for ways to encourage industry to reduce consumption. The country plans to introduce an auction system this summer to pay industrial gas consumers for fuel savings. Authorities in Berlin and Copenhagen are urging residents to shower faster to use less blue fuel at home.