MOSCOW, February 7. /TASS/. Gas storage in Europe would run out in six weeks if the West decides to block gas supplies from Russia, according to a report by British consulting firm Wood Mackenzie.
The analysts added that under any geopolitical scenario, there is a risk that the European Union can approach the winter of 2022-2023 with record low gas reserves.
"Were all gas flows to stop today, existing gas storage would run out in 6 weeks; demand destruction would be massive; and if the disruption was prolonged, gas inventory couldn’t be rebuilt through the summer," Wood Mackenzie experts say adding that in this case, Europe would be facing a catastrophic situation of close to zero gas in storage for next winter.
The company’s analysts do not think European governments could countenance blocking Russian imports even if there’s full-scale invasion of Ukraine.
"It would prove impossible to find alternative volumes to meet 28% of annual demand.
"This scenario highlights how dependent Europe has become on Russian gas and the critical role diplomacy and commercial sensibilities have to play to ensure supplies keep flowing," the company notes.
Wood Mackenzie expects Russian pipeline imports "to increase by 20% above the January lows for the next few months consistent with the capacity booked at the end of 2021."
Europe needs additional gas volumes not only to go through this winter but also to be ready for the next one.
"Even if Russian pipeline gas continues to flow through spring and summer, winter 2022/23 will begin much as this one did - with inventories at a record low. That’s assuming no more Russian gas is made available for export either through Nord Stream 2 or the other routes," the analysts say.
If transit through Ukraine is nevertheless interrupted, then in order to avoid "energy chaos" Europe will have "to pull every lever in the energy system to keep the lights on - reducing gas burn and cranking up mothballed nuclear and coal plant (with all the backlash around higher emissions that would bring); maximizing indigenous gas production (Norway, Netherlands) and pipeline imports (Algeria, Azerbaijan); and persuading Asian buyers to switch to coal and free up LNG," the analysts note.
"Russia also has a lot to lose - not least its reputation as a reliable supplier of gas; and Nord Stream 2 which is in danger of becoming a white elephant. Should Europe choose to wean itself off Russian gas it’s a bullish signal to LNG developers in the US, Qatar and beyond," the analysts conclude.
About current geopolitical situation
Recently, claims of Russia’s potential invasion of Ukraine have been heard frequently in Ukraine and Western states. Kremlin spokesman Dmitry Peskov called such reports an empty and groundless escalation of tensions, underscoring that Russia does not pose any threat to anyone. Peskov noted that provocations may happen in order to justify such claims and warned that such attempts will bear the most serious consequences.
A number of Western media reported that in case of alleged hypothetical Russian invasion of Ukraine, the EU is ready to take tough sanctions against Moscow, which may include abandoning the Nord Stream 2 gas pipeline. Under such a scenario, Brussels admits that Russia may, as a response, reduce gas supplies to Europe, which threatens an energy crisis in Europe.
In January, Gazprom reduced gas exports to non-CIS countries by 41.3% (by 8 billion cubic meters) to 11.4 billion cubic meters. Meanwhile, gas flows from LNG terminals to the gas transmission system of Europe in January turned out to be record ones and reached 11.45 billion cubic meters.