Sun, February 25, 2024

Europe’s Energy Crisis Worsen as Winter Gets Closer

European Stocks

To prevent power rationing or blackouts from becoming unavoidable, Europe must pay a premium for liquefied natural gas imports, hope for a mild winter, and reduce its energy use.

Even if Europe can stay warm and maintain power this winter, it will have significantly greater challenges to replenish depleted storage the next year than it did to reach a European Union aiming to raise stockpiles to 80% of capacity by November this year. Although storage, which is presently at over 90%, is a buffer, and the amount of gas flowing from Russia to Germany through the Nord Stream network stopped, there is still a gap despite increasing supply from other sources.

How Did Europe Get Here?

After the West imposed sanctions in reaction to the war in Ukraine that started in February, Russia gradually decreased gas deliveries through Nord Stream and other channels. Gas from Nord Stream stopped in September.

According to analysts, the region must reduce consumption to get through the peak heating season because the gas deficit represents about 15% of the usual winter demand in Europe. Director of energy economics at FGE, Cuneyt Kazokoglu, stated that the situation would remain very unstable.

The greatest economy in Europe and one of the main consumers of Russian gas on the continent, Germany, are most vulnerable to the disruption in supplies and has been particularly aggressive in creating strategies to protect its consumers and companies. Last month, there was no chance of the Nord Stream network’s supplies to Germany starting up again due to possible sabotage.

Following explosions that destroyed Nord Stream 1 and Nord Stream 2, which had never been used but were prepared by being loaded with gas, European states have stated that they are focusing on enhancing the security of the key infrastructure. Suppose Moscow follows through on its threat to censure Ukrainian energy company Naftogaz and shut down one of the few operational Russian gas pipelines to Europe. In that case, outages in Russia might get worse.

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