Eight months since Russia’s invasion of Ukraine, Europe has not yet transitioned away from Russian energy imports.
The continent is witnessing an energy crisis marked by record-high natural gas prices and utility bills tripling for many consumers.
In 2021, Europe imported US$117 billion in energy from Russia, which included about 40% of Europe’s natural gas consumption and 30% of its crude oil.
Following the war-related disruptions to Russian imports, European countries have scrambled to fill up their underground gas storage reserves for the colder winter months ahead.
Germany has already reached a milestone by filling its gas reserves to 95% two weeks ahead of schedule, while gas storages across the EU are now nearly 92% full, far exceeding their earlier target of 80% by November 1.
While the high levels of gas reserves may soften the blow this winter, European gas storages are only designed to last a few months.
The continent’s crisis is likely to get worse in winter 2023-24 due to increasingly limited flows from Russia, no new natural gas projects coming online in the next year and more competition from Asian markets.
In this article:
- Nord Stream pipeline blasts
- Limited options to restock reserves
- Strike at French refineries
- Potential for blackouts in the UK
- Preparing for winter
Nord Stream pipeline blasts
Until recently, Europe has been receiving ample amounts of natural gas from Russia through the Nord Stream pipeline.
Those flows came to a halt in late August when Russia cut off flows to Europe via Nord Stream in response to Western sanctions.
Any hope that gas flows could resume was dashed at the end of September when the Nord Stream pipeline was damaged after a series of blasts caused what might be the single largest release of methane in history.
An initial investigation into what caused the gas leaks on the Nord Stream 1 and 2 pipelines reinforced suspicions of "gross sabotage".
As investigations continue, many in Europe believe that the incident was the result of an attack, particularly as it occurred during a bitter energy standoff between Europe and Russia.
Norwegian authorities raised a security alert after reports of unidentified drone flights over oil and gas fields. Following leaks from the Nord Stream pipelines, most likely caused by sabotage, the Norwegian armed forces increased patrols in the Norwegian Sea and the North Sea. pic.twitter.com/zXz4kSoyvK— Belsat in English (@Belsat_Eng) October 16, 2022
Limited options to restock reserves
There are other pipelines connecting Russia to Europe, although Russia has recently issued threats that these may follow the same fate as Nord Stream and be shut down.
The operator of the TurkSteam pipeline, running from Russia to southern Europe via Turkey, hinted in September that maintenance work and deliveries could be suspended in response to EU sanctions.
Furthermore, some of the pipelines pass directly through Ukraine and their capacity to deliver gas supplies to Europe could be affected by the war.
Although Europe is importing large volumes of liquified natural gas (LNG) from the US and the Middle East, there are no new natural gas projects slated to break ground next year, meaning supply will stay tight.
For these reasons, the absence of Russian gas flows leaves Europe with few options to restock its reserves before next winter.
Strike at French refineries
Adding fuel to fire, strikes are continuing in France's refineries despite hopes an agreement over pay would alleviate recent shortages at the pumps.
The CGT trade union on Friday rejected a wage increase offer for employees of French energy giant Total Energies after three weeks of strike action that has triggered fuel shortages across the country.
CGT says it's holding out for a 10% increase, considering soaring inflation and windfall profits for energy companies.
Meanwhile in France 2500 gas stations are out of fuel as strikes at refineries continue pic.twitter.com/gMzKjj1YQF— ???????????????????????????? (@AlessioUrban) October 14, 2022
"After the meeting was suspended for one hour, the management simply came back with a proposal of a 20 euro increase per month", said Thierry Defresne, CGT head of the European works council at TotalEnergies.
"We thought that this was a provocation and so we slammed the door and left the negotiating table."
Potential for blackouts in the UK
UK’s National Grid (LON:NG) warned earlier this month that homes in the UK could face a series of three-hour power cuts if gas supplies were shut off.
The company said in the “unlikely event” that there is a shortage of supplies, some customers could have their electricity shut off to “ensure the overall security and integrity of the electricity system across Great Britain".
Power stations running on gas make up around 40% of the UK’s electricity mix but the country is not as reliant on Russian sources as other European nations.
But that is not good news.
National Grid says if the energy crisis means Britain can no longer import electricity from France, the Netherlands or Belgium, then this could lead to shortages.
Preparing for winter
EU countries are preparing for energy shortages this winter and beyond.
“Extraordinary measures” have been formally agreed including a voluntary 10% cut in electricity consumption and a mandatory 5% cut during peak hours for EU member states.
European Council said: “Member states will identify 10% of their peak hours between December 1, 2022, and March 31, 2023, during which they will reduce the demand.
“They will be free to choose the appropriate measures to reduce energy consumption for both of these targets.”
The French government separately announced a package of measures as part of its ongoing plan to reduce energy consumption.
Heating and lighting are being reduced in government offices to avoid shortages and remote working is being encouraged.
The French government hopes that citizens and businesses will voluntarily follow suit.