Ukraine crisis: EU scrambles for options amid fears Russia will cut gas supply
The European bloc gets 40% of its natural gas supply from Russia; a shortage amid winter could bite hard and have economic consequences
As tensions mount between Russia and the West over the former’s moves to occupy Ukraine, the European Union (EU) is looking at energy contingency plans. This is because the bloc gets around 40% of its natural gas from Russian pipelines, of which several run via Ukraine.
Russia has lined up around 100,000 troops on the Ukraine border even as it has stoically denied plans to invade the country. However, according to a CNBC report, US President Joe Biden has warned of a ‘distinct possibility’ that Russia will invade Ukraine in February. This could be hastened because the US has rejected Russia’s main demands to resolve the crisis, and the Vladimir Putin government has ‘little ground for optimism’.
Long winter ahead
Europe is highly dependent on Russia for its supply of gas; all the more so because long weeks of winter still stretch ahead. In a research note, Rob Thummel, senior portfolio manager at TortoiseEcofin, an energy investment firm, said: “European natural gas supplies are well below their typical norms and inventories, so a key question to ask is if Europe has enough natural gas inventory to survive.”
Also read: Why India should support Russia in its standoff with the West over Ukraine
As is, Russia has been accused of disrupting gas supplies to Europe, said CNBC. The Kremlin is trying to leverage its vital role in the supply of energy to Europe, observers have said. The aim is to hasten clearance for the contentious Nord Stream 2, a new 1,200 km gas pipeline running under the Baltic Sea, from western Russia to north-eastern Germany.
The Russia-Ukraine tensions may escalate the gas supply issue for EU, rue political and energy analysts. If the Kremlin chooses to cut gas supplies, it could lead to a major health crisis in the EU with economic consequences, and possibly a public backlash.
Impact on Russia
However, some analysts argue that cutting off supplies will also impact Russia’s finances, since that economy requires energy money. Plus, it may trigger EU nations to find a coordinated solution to trim gas imports from Russia on a permanent basis.
Already, European utilities are importing more liquefied natural gas from the US and Qatar, said CNBC. While these imports are costly and insufficient, they do present an alternative to Russian supplies.
