The European Union could reduce its reliance on Russian natural gas by more than one-third within a year by turning to other suppliers and using other energy sources, the International Energy Agency (IEA) said on Thursday.
The IEA unveiled 'A 10-Point Plan to Reduce the European Union's Reliance on Russian Natural Gas,' which includes replacing Russian supply with gas from other sources, such as more pipeline gas from Norway and Azerbaijan and increased LNG intake. The EU could also introduce minimum gas storage obligations to enhance market resilience and support regional coordination of gas storage levels and access. Accelerating wind and solar power capacity deployment is also part of the IEA's plan, as is maximizing generation from existing low-emission sources such as bioenergy and nuclear.
The agency was among the many voices in the industry to blame Russia for the energy crisis in Europe earlier this winter before Russia invaded Ukraine last week.
Low natural gas deliveries from Russia appear to have artificially tightened the European gas market, the IEA's Executive Director Fatih Birol said in January, adding that energy systems "face significant risks" by relying too much on one supplier for a key energy source.
"We see strong elements of 'artificial tightness' in European gas markets, which appears to be due to the behaviour of Russia's state-controlled gas supplier," Birol wrote in a LinkedIn post in January.
Per IEA estimates in its report today, the EU imported 155 billion cubic meters of natural gas from Russia in 2021, which accounted for around 45 percent of EU gas imports and nearly 40 percent of its total gas consumption.
"Nobody is under any illusions anymore. Russia's use of its natural gas resources as an economic and political weapon show Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter," Birol said in a statement today.
Ensuring gas for Europe for next winter should not be a problem, analysts and the European Commission say, but long-term, the EU will need unity, change of regulations, and improvisation in its efforts to reduce dependence on Russian gas.
By Tsvetana Paraskova for Oilprice.com
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Comments
The reasons are:
1- Norway’s gas supplies to the EU can’t be increased beyond the current level.
2- The maximum volume of gas piped through the South Gas Corridor (SGC) pipeline from Azerbaijan to the EU via Turkey can’t be increased beyond 20 billion cubic metres per year (bcm/y) which is the capacity of the of the gas pipeline.
3- The EU has limited import capacity of LNG.
4- There is a limit to how much major LNG suppliers like the United States, Qatar and Australia can expand their LNG production capacity in the next five years to satisfy rising demand from both the Asia=Pacific region and the EU .
5- Iran has neither major pipelines to ship its gas to Europe nor has it an LNG export capacity. It will take years before Iran is able to ship its gas to the EU.
6- Accelerating wind and solar power capacity deployment is easy said than done because of their intermittent nature.
7- Nuclear energy is opposed by Germany, the EU's largest economy and many other EU members.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London