Russia’s energy influence over Europe ‘near end’
Germany is currently ahead of schedule in the race to fill underground gas storage facilities before winter.
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Energy and political analysts say Europe’s reliance on Russian gas appears to be coming to an end, potentially alleviating the risk of further supply disruptions at a time of great concern. . Russia can completely cut off deliveries in winter.
Europe in recent months has suffered a Gas exports from Russia plummetedtraditionally its largest energy supplier.
It has deepened the bitter dispute between Brussels and Moscow and exacerbated the risk of an economic downturn and winter gas shortages.
Russia has cited faulty or delayed equipment as the reason for the drop in deliveries. However, European policymakers see the supply cuts as a political move aimed at sowing instability across the 27-nation bloc and raising energy prices amid the Kremlin’s assault on Ukraine.
Russia’s energy weapons are about to become controversial.
Global forecasting director at The Economist Intelligence Unit
Agathe Demarais, global forecasting director at The Economist Intelligence Unit, a research and consulting firm, told CNBC that the Kremlin appears to be weaponizing energy supplies and “burning bridges” with Europe while still possible.
When asked if Russia’s energy influence over Europe might be coming to an end, Demarais replied: “Yes. Actually, a lot.”
“Europe is heading for a very difficult winter, perhaps two very difficult adjustment years with a lot of economic pain. But then Europe will essentially become more independent from the recession,” Demarais said. more diverse combinations”.
And that means Russia’s energy weapons will become controversial. “Our view is that Russia knows it and that’s why it is destroying gas supplies or causing uncertainty because it knows that if it wants to damage Europe, it has to be done now. It’s a now or never question.”
Race to fill up gas
Until recently, Germany bought more than half of its gas from Russia. However, Europe’s largest economy is currently ahead of schedule in its race to fill underground gas storage facilities with enough fuel to help keep homes warm during colder months.
Analysts told CNBC that Germany could quickly fill up its gas reserves in recent weeks due to a number of factors. These include strong supply from Norway, the Netherlands and other countries, falling demand amid rising energy prices, businesses switching from gas to other fuels, and more government supplies. 15 billion euros ($15.06 billion) line of credit to add storage facilities.
The latest estimates from the electricity industry association BDEW show that Germany’s gas consumption from Russia fell to 9.5% in August. This is down from a whopping 60% in same period last year.
BDEW data shows that Norway has become Germany’s largest gas supplier, supplying almost 38% of German consumption last month. The Netherlands, Germany’s second-largest supplier, is estimated to have delivered about 24% of German gas in August.
Ian Bremmer, president of political risk consultancy Eurasia Group, said via Twitter last week that it “increasingly looks like Germany can get through the winter without a strict allotment” even in The worst case scenario is that Russia turns off the faucet completely.
That’s “very good news,” Bremmer said. “Russia’s energy influence over Europe is nearing an end.”
‘Winter has yet to come’
While the EU is well on its way to achieving its gas storage capacity targets, Analysts warn that this alone will not be enough.
The projected demand cuts are needed to ensure that fuel is stored long enough to adequately support homes and businesses throughout the winter.
Jacob Mandel, senior associate for commodities at UK-based consulting firm Aurora Energy Research, says that if the EU fills up its gas storage facilities before winter, the best-case scenario would be This reserve lasts about three months.
“The threat of shortages remains,” Mandel said. “A surprise drop in prices can quickly drain inventory if imports don’t keep pace.”
While the EU is well on its way to achieving its gas storage capacity targets, analysts warn that this alone will not be enough.
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Latest data compiled by the European Gas Infrastructure industry group Shows that the EU’s overall storage level is at more than 80% on average, while Germany’s underground storage is 84% full before winter.
Andreas Schroeder, head of energy analysis at ICIS, a commodity intelligence service, told CNBC by phone that Russia’s leverage over Europe’s energy “isn’t over yet, but it’s fading.” – slow but sure.”
However, “we’re still in a record high price environment, so obviously, the downflow affects the European market to the point where we have super high prices,” Schroeder said.
“This is not over even as Germany is slightly ahead of its storage target and the entire European Union fills up its storage [levels]. And by reducing dependence on Russian flows, it has brought very high prices. “
“Winter hasn’t come yet,” said Schroeder. “If winters are mild, we need to cut consumption less, but if winters are severe, we need more. [the] weather now. “