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    Europe can only partially replace Russian gas


    January 28, 2022 - AFP World News

     

      Russia furnishes over 40 percent of the natural gas Europe imports and in the event it invades Ukraine again those supplies could be at risk, throwing into question European countries's ability to keep the heat on in the dead of winter.

      Europe, which imports around two-thirds of its natural gas, has alternatives to replace some of what it currently buys from Russia.

      Moreover, experts judge it highly unlikely there would be a complete halt to Russian gas deliveries.

      - The alternatives -

      "There are pipelines from Norway, Algeria and Azerbaijan, but these countries don't have additional production capacity," said Thierry Bros, a specialist on the European gas market at Sciences Po university in Paris.

      That means Europe will need to turn to liquefied natural gas (LNG), which can be delivered by huge sea tankers from suppliers anywhere in the world.

      Washington is helping Europe find alternative supplies to cover a majority of Russian imports, and US President Joe Biden will host Qatar's ruler Sheikh Tamim bin Hamad Al Thani at the White House next week.

      For LNG supplies, "the three giants today are Qatar, Australia and the United States," said Vincent Demoury, head of the GIIGNL international trade association of gas import firms.

      "So it's mostly these three countries which have the flexibility to produce more, or to switch to Europe volumes which traditionally go to other markets," he said.

      - LNG only a partial solution -

      "We can't replace all the Russian gas with LNG," noted Thierry Bros.

      That is because the ports and regasification facilities in Europe (UK included) can only handle 19 billion cubic meters (bcm) per month.

      The are currently handling about 8 bcm per month, which means they could take another 11 bcm per month.

      That would be able to compensate for most of the 14 bcm per month that Europe is currently receiving from Russia.

      But Demoury said it is one thing to look at capacity on an annual basis, and another to look at it in the middle of winter when the utilisation rate of LNG terminals is much higher.

      If Spain and Britain LNG terminals currently have sufficient spare capacity, said Demoury, French terminals are saturated.

      - Unlikely Russia turns off taps -

      Europe's gas reserves are weak for winter and imports from Russia are at historic lows for the month of January.

      But would Russia completely cut off supplies?

      "A full suspension of gas exports remains the least likely scenario," said analysts at Eurasia Group.

      Such a move "would carry severe long-term risks to Russia's financial stability and its political leverage in Europe as the EU would likely respond by aggressively diversifying its energy supplies," they added.

      Thierry Bros said "the Russians don't have any interest in halting deliveries" completely.

      Other than Moscow's interest in having money continue to flow into its coffers, maintaining some deliveries "would allow it to create divisions in Europe" as it could continue to supply certain countries like Germany while cutting off others such as Poland and Lithuania.

      While that would create political problems for Europe to manage, it would help it get by with additional LNG shipments.

      jmi/rl/bp

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