The gasman cutteth
Europe could survive a cut-off of Russian gas, but only a short one
NAPOLEON and Hitler both succumbed to the bitter Russian winter in their efforts at territorial expansion in Europe. Now, Vladimir Putin seems to be exporting a bit of Russian chill as part of his strategy to shift Europe's borders in his favour. In recent days there have been ill-explained reductions in the flow of gas that Gazprom, a Russian state firm, supplies to Poland, Austria and Slovakia—possibly to warn them off re-exporting any of it to Ukraine.
Russia provides one-third of the gas that other European countries rely on to heat their homes, generate electricity and feed industry. So far the assumption among western European governments and industrial gas users is that even if relations with Russia worsen further, there is little danger of a complete and long-term cut in supplies, since Russia's government is so dependent on the revenues from gas exports.
However, a short-term interruption in the coming months, as winter descends, is not so unthinkable. Fortunately, most European countries would be able to struggle through. Their gas-storage facilities are about 90% full, since last winter was mild and they did a bit of further topping-up over the summer. Last year Europe imported 155 billion cubic metres (bcm) of Russian gas; stocks currently stand at 75bcm. So European energy distributors would have a few months' grace to find alternative supplies.
Norway, a big producer, could pump a bit more. China's slowing economy and Japan's reopening of some nuclear plants will mean more liquefied natural gas (LNG) is available on spot markets, though it is costly. Europe has the capacity to import more than 200bcm of LNG a year, of which just 20% is in use. Contingency plans being drawn up by the EU are also said to include cutting gas to industry to preserve supplies for heating homes and generating power.
Half of Europe's imports of gas come down pipes that traverse Ukraine, and Russia has cut their flow several times since 2006 over price disputes with the Ukrainians. If it did so again, it might pump more gas down pipelines that bypass Ukraine. Trouble is, these do not reach those countries most dependent on Russian gas, such as Hungary, Bulgaria, the Baltic states and Finland. The Finnish coalition government is at risk of falling because the Green party is threatening to quit over plans to buy a Russian nuclear reactor, which it says would increase, not reduce, dependence on Russia.
EU countries are making some preparations for short-term cut-offs but almost nothing has been done to reduce long-term reliance on Russia. There is much that could be done: governments could encourage the building of more cross-border pipelines to connect customers to sources of supply, including the underused LNG import terminals; more storage capacity could be provided; and those countries with shale reserves could get fracking. So far all that has been produced is hot air, and not the useful kind.