Putin reaches for the gas pipes
As long predicted, it looks as if Russia will weaponise European gas supplies. Emily Hohler reports
On Wednesday, Russian state-controlled energy company Gazprom shut off the supply of natural gas to Poland and Bulgaria, “a move that marks a significant escalation in the economic tension between Moscow and the West over the war in Ukraine”, say Reis Thebault and Bryan Pietsch in The Washington Post.
It is the first time Russia has acted on Vladimir Putin’s March mandate that “unfriendly countries” pay in roubles, a demand that European leaders rejected, saying it would be a violation of contracts. Poland gets more than 45% of its natural gas from Russia, and Bulgaria more than 70%, but Poland’s PGNiG gas company says its gas storage is almost 80% full while Bulgaria has secured alternative supplies.
Nevertheless, Russia remains the EU’s main supplier of oil and solid fossil fuels as well as gas, and experts have long worried that this dependency could be weaponised. Andriy Yermak, chief of staff to Ukrainian president Volodymyr Zelensky, said this was the start of “gas blackmailing” and an attempt to “break the unity” of Ukraine’s allies, says Marek Strzelecki on Reuters. Kyiv has long been calling for Europe to stop “funding Moscow’s war effort by cutting off imports”. However, weaning Europe off cheap and plentiful natural gas, which “heats its houses, fuels its factories and drives its electric power plants” is a very tall order.
Price rises and political turmoil
Last month, the European Commission revealed its plan to wean the bloc off Russian fossil fuels by 2030, shifting to alternative sources and ramped-up renewables. Natural-gas imports are due to be cut by two-thirds this year. At the time, one of the EC’s top officials acknowledged the transition would be “bloody hard” and lead to price increases and “possible domestic political turmoil”.
The EU won’t be replacing those lost Russian imports with fuels from the US “any time soon”, says Clifford Krauss in The New York Times. Most American oil businesses aren’t “eager” to capitalise on this moment by “pumping more oil”. Nor are Saudi Arabia, the UEA and other members of oil cartel Opec. Investors don’t want to up production and “hasten the end of high oil prices”. The Covid-induced price crash of 2020, which forced many American firms to lay off thousands, shut down wells and “seek bankruptcy protection”, is still fresh in their minds.
Over the past 20 years, oil firms have mostly responded to surging prices by “investing and pumping more” only to witness a “huge crash”. Oil firms also face higher prices for labour and materials along with “political and regulatory uncertainty”. Investors see a “brighter future” for renewables than for fossil-fuel projects.
What about nuclear? Advocates say nuclear energy could complement a “major pivot” away from fossil fuels that was already under way before the invasion, say Liz Alderman and Stanley Reed in The New York Times. So far, however, the “dash” to find ready alternatives to Russian fuel has merely “magnified a political divide” in Europe, with a pro-nuclear bloc led by France opposed by Germany and others who cite the “dangers of radioactive waste”.
Timescales are also an issue. A planned fleet of 13 new-generation reactors in France won’t be ready until at least 2035; the first part of Britain’s only new nuclear station, Hinkley Point, isn’t expected to come on line until 2026. Meanwhile, Germany is due to close all its plants by the end of the year. Still, a recent “string of upbeat declarations” from Britain, the Netherlands and some Eastern European countries in “Russia’s shadow” suggest “Moscow’s aggression may help reverse what had been an arc of gradual decline”.