Without Russian gas, Europe’s dependence on America is all but guaranteed, Welt business observer Daniel Wetzel has indicated.
In a piece this week exploring the European Union’s precarious energy situation, Wetzel pointed out the that bloc’s room for maneuver is extremely limited when it comes to finding vast quantities of gas at reasonable prices to replace those traditionally provided by Russia.
The observer cited a study recently commissioned by German gas industry association Zukunft Gas by Cologne University’s Energy Economics Institute, which modeled scenarios for Europe’s gas demand and the ability by countries outside the region to deliver.
The study found that over the long term, increased imports from countries like Norway, Azerbaijan and Algeria could only absorb demand for a short period, with only the United States enjoying the capability to provide Europe with the needed energy with its fracking-derived gas, for a price.
In 2021, Russia delivered some 150 billion cubic meters of gas to European clients via overland and undersea pipelines, and another 18 billion cubic meters in the form of liquefied natural gas (LNG).
By comparison, the Baltic Pipe pipeline carrying gas from the Norwegian sector of the North Sea to Poland via Denmark has a capacity to pump just 10 billion cubic meters per year (cm3/yr), while the Trans-Anatolian gas pipeline running from Azerbaijan west through Turkey can send 16 billion cm3/yr, with part of that gas remaining in Turkey. The TransMed pipeline delivering Algerian gas to Europe can pump up to 32 billion cm3/yr via Italy, while the Medgaz pipeline can carry another 8 billion cm3/yr.
The Zukunft Gas study calculates that the substitution of Russian gas with Norwegian, Azeri and Algerian pipeline-based supplies would be able to quench only 25 percent of Europe’s thirst for natural gas, meaning only Washington could provide the remainder of supplies in the form of LNG. The report estimates US exports to jump as much as six fold, from 22 billion cm3/yr in 2021 to 136 billion by the end of the decade. Such a jump would result in the US gaining a 40 percent share in the European gas market, roughly the same share Russia had until this year.
“This does not bode well for the European Commission’s diversification strategy,” Wetzel stressed, recalling that Brussels had instead hoped “to set up a large number of alternative supply relationships to enable it to be more flexible in future when it comes to procurement and price negotiations.”
However, with Norwegian, Algerian and Azeri sources tapped out, and Nigerian, Israeli, Egyptian, Trinidadian and Senegalese export capacity expected to increase only marginally, Brussels will have no other choice but to accept the warm embrace of its American partners.
On top of that, Europe is not the only energy-hungry entity in town, with the vast North Field gas reservoir off the coast of Qatar already almost entirely reserved in long-term contracts by Asian countries, even though production isn’t expected to begin until 2026.
Ultimately, the Zukunft Gas study expects prices to remain 400 percent above their pre-crisis levels as late as 2026, and for the bloc to reach 2018 price levels only by 2030 – and even then, only if nations are able to reduce their consumption by 20 percent via efficiencies and alternative energy sources.
Russia Told You So
Moscow has repeatedly warned European nations of the consequences of their “suicidal” push to reject Russian energy supplies, pointing to the impact this would have on EU industries’ competitiveness vis-à-vis the US and China.
Last month, Russian President Vladimir Putin reiterated that Russia was ready to turn on Nord Stream 1 and 2 and its 110 billion cm3/yr capacity at a moment’s notice if Europe dropped its sanctions. “It’s enough to simply press a button. But we aren’t the ones who placed sanctions on Nord Stream 2. [Europe] did so under US pressure. And why are the Americans pressuring the Europeans? Because they themselves want to sell the latter gas for three times the price,” Putin said.
On Friday, in a speech at a ceremony marking the accession of the Donbass, Kherson and Zaporozhye into the Russian Federation, Putin accused the US and its allies of taking a step beyond sanctions to undermine Europe’s energy security by sabotaging Nord Stream.