Close the gas valve, the EU is not cold right away, but Russia will lose a lot, a lot of money
On April 2, Lithuania became the first EU country to announce a complete abandonment of Russian gas. The announcement comes after the Kremlin announced new payment rules for “unfriendly” countries.
Under the new rules, importers from the EU will have to open a ruble payment account at Gazprombank and payments will be made through this bank.
Shortly after, Poland also made a similar decision to Lithuania, Warsaw said it would stop buying gas from Russia after 2022.
However, Slovakia and the Czech Republic, two landlocked European countries, do not seem ready to take such drastic measures. Slovak Economy Minister Richard Sulik said the country cannot give up Russian gas and will accept payments in rubles if necessary. About 85% of Slovakia’s gas needs come from Russia, and even with the diversification of gas supplies, it will still be several years before the country can stop buying gas from Russia.
“We can’t be cut off gas,” Slovak Minister said.
Meanwhile, Germany also announced that it will gradually eliminate dependence on Russian gas with a well-planned plan. However, German Deputy Chancellor and Economy Minister Robert Habeck said that this should be done gradually because it could potentially cause a deep division in the German economy – society.
EU can use reserves
The EU currently consumes a total of 400 billion m3 of gas per year, of which about 150 billion m3 (equivalent to about 40-45%) is supplied by Russia. However, according to RT, these are interdependencies. In 2021, Russia exports 200 billion m3 of gas, of which 75% goes to the EU.
According to experts, if gas supplies are stopped immediately, Western European countries will face very severe consequences in late summer or early autumn. This is because at the beginning of April, a heating season has just ended and any current needs can be met with stock already in stock.
Marcel Salikhov, President of the Russian Institute of Energy and Finance Marcel Salikhov told RT that gas consumption fluctuates sharply depending on the season.
It is very difficult for Russia to reshape the gas pipeline system from Europe to Asia. Photo: Getty
“During the heating season, autumn and winter, gas consumption increases sharply throughout Russia and the EU. But now the demand for gas is decreasing. And if we imagine hypothetically, that gas supplies are stopped immediately, then the EU will be able to survive until the end of summer or early autumn due to its own production and imports of natural gas. liquefied petroleum gas (LNG). But the problem is that the gas will not be pumped into the storage facilities during this time, and the problem will arise. [EU] What to do at the beginning of the next heating season. Although the EU will have some time to thoroughly search for alternatives“, said Mr. Salikhov.
He said that, under the current plan, all EU countries cannot guarantee sufficient heating in winter without Russian gas.
But individual countries, like Poland, can afford to abandon their dependence on Russian gas. In 2022, the Baltic Pipe gas pipeline from Norway will come into operation and in theory it will be able to supply 10 billion cubic meters of gas instead of Russia today. Although Norway is unlikely to fill the pipeline to 100% capacity, Poland can narrow the deficit by purchasing LNG on the world market, as it already has an LNG receiving port in Swinoujscie.
Adverse scenario
Igor Yushkov, a leading expert at Russia’s National Fund for Energy Security, told RT that if the EU stopped importing Russian gas, “there will certainly be a global energy crisis”.
He talked about one of the most unfavorable scenarios if Russia would cut production.
“What if Russia can’t supply gas via pipeline to Europe and cut large amounts? At last, [Nga] The gas cannot be redirected anywhere, nor can the pipelines be reshaped. If this massive volume were to simply leave the market, the remaining gas would become scarcer and more expensive. In this regard, if a large consumer like Poland refuses to buy gas from [Nga] the reduction in production by 10 billion cubic meters per year, will affect the spot market in all cases. And imagine if the entire 150 billion cubic meter disappeared from the market… It would be a global crisis“, said Mr. Yushkov.
According to this expert, if we give up our gas, the EU could face energy supply problems, because there will simply be nothing to produce electricity. The situation could get worse if, in response to the gas embargo, Russia stops exporting coal to EU countries, which account for 70% of its demand. In that case, the EU energy sector will be forced to return to the “manual” era.
“There may not be any trades left in the spot market. The exchange of greenhouse gas emissions quotas will be suspended and forgotten for a very, very long time. All possible nuclear power capacity (for example, German nuclear power plants) will be restored. Electricity will be provided hourly. It will be extremely difficult to prepare for the next hot season. It is necessary to save gas, ban the use of air conditioners and supply electricity by the hour. Apartments will not be heated to 22°C, but possibly 10-15°C….“, said the Russian expert.
“But it’s the same, [những thay thế] That will not be enough to replace the volume that Russia provides. Especially if Russia also suddenly stopped supplying coal. There is no excess gas on the world market, so there is nothing to replace Russian supplies. For example, production is declining in the North Sea because the fuel has run out, plus no one has invested in it for years. Therefore, the situation is very difficult for Europeans“, added Mr. Yushkov.
In fact, in February 2022, Norway’s largest gas producer, Equinox, announced that it would not be able to supply more fuel to the EU if the bloc stopped importing from Russia.
In the industrial sector, energy will become scarce and the goods produced will be “very, very expensive” and uncompetitive with their Asian and American counterparts.
According to experts, despite the fact that the EU is trying to accelerate the process of replacing Russian gas, these plans are difficult to implement in the near future.
Suren Kazaryan, a senior consultant at consulting firm Big4 said that, if the EU refused to buy gas from Russia, it would certainly depend heavily on US LNG and its strategic energy reserves. . “As a result, the EU would have replaced an adjacent cheap pipeline with expensive tankers from the other side of the world.“.
For European industries that use gas as a primary feedstock, there are simply no gas alternatives right now. “Changing production lines and getting everything on the pipeline using LNG is not a matter of a year or two. New equipment, storage conditions and manufacturing processes are needed, all of which are difficult and resource-intensive“.
Two problems for Russia
Sanctions on Russian gas will always have an impact on the importing economy. The main problem is that Russia does not have enough development infrastructure to compensate for the losses by diverting supply to other markets..
Salikhov said that it would be more difficult for Russia to deal with this situation than to be denied oil by the EU.
“The EU is very dependent on Russian gas, but this also means that Russia is very dependent on the European market. There are few alternatives from the current point of view, simply because the entire Russian gas pipeline system is headed to Europe and cannot redirect flows to other important markets in the system. current gas transportation. There is Turkey, but it already consumes a lot of Russian gas, and they will not necessarily be prepared to increase their purchases.“, he said.
The Russian expert further explained, Asian countries may be willing to buy more, but the question is how. Because the only gas pipeline to the East today is the Power of Siberia to China, which is not yet connected to the Russian gas supply system, so it is not possible to transfer the gas produced in Yamal to China. This means that Russia needs to quickly negotiate with China about Siberian Power-2. While the concept of this already exists, it is still at the design stage and no concrete agreement has been reached yet.
In addition, the demand for gas from China and India is both increasing, so technically it is difficult to increase the supply to these countries.
There are similar problems with LNG plants. Currently there are only two large companies in Russia – NOVATEK on the Yamal peninsula and Gazprom on Sakhalin Island. According to Mr. Salikhov, the two companies were operating at full capacity and were unable to increase exports from these facilities.
Both of these plants, built with foreign technology, are unlikely to be supplied to Russia anymore. For example, Linde AG, a German company, has stopped working on new projects in Russia and intends to comply with EU sanctions against Moscow.
Yushkov admits that Russia does not have the technology or equipment to build large-capacity LNG plants.
“Shell is built in Sakhalin, and Yamal LNG is built on American technology. The new Arctic LNG-2 plant is being built based on German Linde technology. Russia’s main task is to develop it. Russia can still build medium capacity LNG plants despite difficulties, and then easily scale up medium capacity LNG plants to produce output After that, Russia will continue to export LNG from these plants to be flexible in choosing sales markets,” Mr. Yushkov described potential opportunities.
But in any of these situations, Russia will inevitably suffer obvious material losses as reorienting the flows will take a long time. Salikhov predicts that, even if the construction of Power Siberia-2 starts today, it will take about 5 years to complete.
“LNG plants also take 5 years to build. Yes, gas prices will go up, but if you don’t export, what else can you do?”, Salikhov asked the question.
He emphasized:Russia will lose money anyway, and [EU] will lose power and heating. This may not be equivalent, but Russia has to admit that gas is currently bringing Russia a lot of money. Gazprom sold $9.5 billion worth of gas in January alone, ‘ said Yushkov.
Law and Readers
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
