Europe after Russian gas  .. to where?

Prepared by Najat Abdel Qawi Aoun

Master's Researcher, Faculty of Economic Studies and Political Science, Alexandria University

Introduction

Russian gas lines extend like cobwebs to Europe via a network of pipelines that exit Russia and go tothe majority of European countries. The European continent relies on Russian gas supplies mainly for heating, as Russian gas exits the fields to enter European homes directly through pipes.

Europe imports more than 40% of its gas needs from Russia, because Russian gas reaches Europe through pipelines and is considered cheap due to its low cost.

Following the Russian invasion of Ukraine, European countries turned to importing liquefied gas, which is more expensive, in order to fill the deficit in stocks.

EU countries are seeking to diversify their supplies of European gas, as evidenced by the EU's encouragement of the establishment of the Egypt-based Eastern Mediterranean Gas Forum in a bid to reduce dependence on Moscow.

The following map shows the distribution of Russian gas pipelines across the European continent and the countries that reach or pass through them, accordingto data from the Russian company Gazprom.

Are European countries capable of independence from Russian gas?

Russia's invasion of Ukraine has raised concerns among European countries for Europe's energy security, but the European Commission's climate policy chief announced that the Commission will propose a line to diversify Europe’s fossil fuel supply away from Russia, and plans will be drawn up to quickly shift to renewable energy. This is in an effort to secure the energy needs of European countries.

The plans proposed by the European Commission aim to:

1- Reducing dependence on Russian gas by increasing imports of gas and liquefied natural gas from other countries.

2- Start the gradual operation of alternative gases such as biomethane and hydrogen.

3- Building solar and wind energy projects faster.

4- Ensure that Europeancountries fill gas stocks before winter to mitigate supply shocks.

Europe could cut its imports of Russian gas by more than half within a year, but doing so would require a series of quick measures, such as replacing gas boilers with heat pumps and increasing imports of liquefied natural gas, the International Energy Agency says.

European moves to avoid Russian supply shocks

Germany: Germany, Russia's biggest buyer of crude oil, has rejected sanctions on Russian energy supplies. Germany has begun to expand renewable energy, and Economy Minister Robert Habeck described the move as a key element in making his country less dependent on Russian fossil fuel supplies.

Germany aims to accelerate the expansion of renewable energy to obtain all its electricity needs from clean and renewable sources by 2035.

Lithuania: Lithuania announced the suspension of gas imports from Russia, as Lithuanian Energy Minister Dainius Krevis  announced that Lithuania is the first country in the European Union  to achieve complete independence from Russian gas supplies, and that all Lithuania's gas needs will come through a liquefied  natural gas terminal  in the port city of Klaipėda. The natural gas plant is now operational, which Lithuania believes can meet Sweden, Poland and Finland's gas needs.

Since early 2015, Lithuania has been seeking to reduce its dependence on Russian gas imports by building the floating facility, and currently 3 large cargoes of liquefied natural gas are scheduled to arrive at the floating facility every month.

France: French Economy Minister Bruno Le Maire stressed that Europe has many solutions to become independent of Russian gas and  stated that he wants to accelerate work under them to be able to meet the winter challenge of 2022 and 2023, and said that gas prices will be frozen for consumers in France until the end of 2022.

Le Maire mentioned several solutions:

1- The need to accelerate gas storage starting from the current summer to store 90% of the needs needed to face the current and next winter.

2- European countries make mass purchases to obtain reduced prices.

3- European countries diversify supplies from other producers.

4- Improving the performance of liquefied natural gas stations, and explained that there are 7 of them in Spain and 4 in France, but none of them in Germany, and pointed out that he discussed with the leaders of the ENGIE group ways to improve the operation of the stations.

5- Use emergency measures such as shutting down gas-intensive industries.

6- Le Maire stated that the latter solution is biogas and biomass, which are alternative solutions produced in France that would help to gain independence from Russian gas.

Le Maire explained that the shortage of Russian gas  supplies does not have the same effect in all European countries, as France depends for 20% of its supply  on Russian gas, while the European average is  40%, and some countries are completely dependent on Russian gas,  such as Finland, which gets its gas supplies 100% from Russia.

French President Emmanuel Macron announced his country’s massive expansion in the construction of nuclear reactors, and said that it is expected to build 6 new nuclear power plants in the eastern Belfort region, in addition to the establishment of 8 other power plants by 2050. He also announced that renewables will be expanded in France.

Spain: Europe seeks to free itself from dependence on Russian coal and gas, and Spain leads the old continent to achieve this goal. European countries are aware that Spain can play an important role in supplying Europe with energy, so European Commission President Ursula von der Leyen announced that Europe seeks to achieve a real connection between the Iberian Peninsula and the rest of the Union.

Despite the above, reality tells us other facts, the Russian company  Gazerum announced that European buyers have increased their orders to buy natural gas  from it despite the rise in prices against the backdrop of sanctions imposed on Russia, and the company's spokesman Sergey Kopriyanov told  reporters that Gazerum continues to supply Russian gas  through Ukrainian territory normally. According to European consumer demands, the above facts deny claims by European countries regarding their ability to become independent from Russian gas at the moment. There are a range of obstacles to the EU's ability to offset the Russian energy market currently.

What are the alternatives to Russian gas for European countries?

With Europe looking for alternatives to Russian gas, and talk of returning to coal and building nuclear power plants, La Tribune newspaper issued a report in which it indicated that these alternatives will negatively affect the climate, deepening the global warming crisis. UN environmental organizations have also pointed to the danger of relying on coal and nuclear power plants.

There are a set of alternatives proposed to replace Russian gas:

1- Liquefied gas

 LNG is one of the proposals that European countries may rely on if Russia cuts off supplies, and although LNG is the cleanest type of fossil fuel, it is a fossil fuel, and contributes to irreversible climate damage. If European countries rely on it despite its shortcomings, it is notavailable enough to meet all Europe's energy needs.

2- Coal

Coal is the most polluting fossil fuel, responsible for more than 0.3°C from a 1°C increase in average global temperatures, making it the single largest source of global warming, so a return to coal consumption would be catastrophic for the future of the planet. Europe is expected to return to use old coal plants that have been shut down if Russia halts gas supplies.

3- Renewable energy in Europe

European leaders view the Russian invasion of Ukraine as an opportunity to accelerate the transition to renewable energy sources, including nuclear plants. Nuclear power represents a clean alternative, as nuclear power generation increased by 6% in 2021 compared to 2020.

The current problem facing European countries is that many nuclear plants have reached the end of their life cycle and are very expensive to rebuild, with an operational life of about 40 years.

4- Clean hydrogen

Analysts predict that imports of clean hydrogen-based fuels could play a role in solving Europe's energy crisis, while others argue that Europe could be jeopardized by Russia's decades-long energy dependence if it follows a certain path to hydrogen production.

Australia is a potential supplier of hydrogen, with studies suggesting that South Australia'sworld-class renewable energy resources will give it a competitive advantage in the race to supply Europe with clean hydrogen via the Port of Rotterdam.

There is a group of candidate countries to be an alternative to Russia in supplying the European continent with gas and energy, namely:

1. Azerbaijan

Azerbaijani Deputy Energy Minister Nursultanov has previously stated that his country has sufficient reserves of natural gas and can export more of it to Europe.

Azerbaijan currently exports 10 billion cubic meters of gas to Europe, and can export more via the Adriatic Line (TAP), which will have enough capacity totransport Azerbaijani gas to Europe and will allow the construction of infrastructure for complex gas pipelines in Europe.

Several reports indicated Azerbaijan's ability to send more natural gas to  Europe through the development of the third phase of the Shah Deniz reservoirs, and the Absheron region  has sufficient reserves, as well as the case for the Shafaq Asiman gas field and the Omid and Babak basins, but in return Europeans should encourage their companies to invest in Azerbaijani gas fields, and European companies should seek to conclude long-term contracts to buy natural gas  from Azerbaijan.

2- Qatar

  Qatar is one of the largest gas producers in the world, and it can replace Russia in gas exports, and Qatari Energy Minister Saad Al-Kaabi has already told the European Union's Energy Commissioner Kadri Simpson that his country is ready to help Europe when needed, and the United States of  America has raised the possibility of Qatar supplying gas to Europeancountries.

Although Qatar has the largest natural gas field in the world, it  cannot meet Europe's needs at the moment, because European countries are equipped to receive gas through pipelines whileQatar does not export gas via huge trucks of liquefied gas, meaning that Europeans need special facilities to reconvert gas from liquid to gaseous before it can be used.

Qatar also sends most of its shipments to Asia under long-term contracts that cannot be broken at the moment, and it is   unwilling to cede its partnership with Asian countries even if doing so would bring political and financial gains to the United States and Europe.

 Since last December, Qatar has shipped 6 cargoes to northwestern Europe, while the United States has delivered42 cargoes during the same period, quantities that could make a big difference to the European deficit.

3. United States of America

Over the past months, the number of gas shipments heading from the United States to Europe has increased, with reports indicating that about three-quarters of American liquefied gas went to Europe in January, as a sharp increase in demand led to higher prices and exports.

As a result of growing European demand for U.S. K gas, in January America became the world’s largest exporter of liquefied natural gas (LNG) for the first time.

Can European countries replace Russian gas with supplies from Africa?

Due to the Russian invasion  of Ukraine and the repercussions on gas supplies from Russia, European countries are looking for alternative gas  suppliers, and the African continent plays an important role in reducing dependence on Russian exports, as some African countries have large gas reserves, but in many cases production and transportation capacities are limited.  These include Algeria, Nigeria, Egypt and Libya.

1- Algeria

Since the outbreak of the war between Russia and Ukraine, Algeria has expressed its readiness to increase exports of natural gas and liquefied natural gas, and Algeria seems to be the ideal destination for the European continent as a liver for Russia by virtue of its geographical location close to Europe, and Algeria is the  tenth largest gas producer in the world, and it ranks third in the export of  liquefied natural gas to Europe.

Algeria exports natural gas through three pipelines, one of which was shut down after strained relations with Morocco, which represents an obstacle if Algeria wants to supply Europe withlarge quantities of gas, as the rest of the pipelines cannot meet the needs of Europeans of gas.

In addition to the above, there are other obstacles, legally Algeria cannot sell all its gas to European countries because of the free trade agreement it  concluded with  the European Union,  which prevents it from selling its gas directly, so the European Union must  change this law in order to allow Algeria to contribute to the compensation  of Russian gas.

If Algeria manages to overcome all these obstacles, it will not be able to replace Russian gas on its own, as its production is much lower than Russia, and the maximum percentage that Algeria can reach in terms of meeting European demand is 20%.

2. Nigeria

The Europeans believe that Nigeria can replace Russia in providing gas supplies, as Nigeria's natural gas reserves reached 5.5 trillion cubic meters by the end of 2020, the largest gas reserves in Africa. France, Portugal and Spain are Europe's largest importers of liquefied natural gas from Nigeria.

Nigeria has already begun to build pipelines to Europe to increase its exports, but there are many obstacles, the most important of which is the lack of infrastructure to deliver gas to Europe, and the lack of financial funding to complete this infrastructure.

In addition to the above, there is a security obstacle, as the route of the gas pipeline programmed between Nigeria and Europepasses through several security hotspots, starting with the Niger River del in southern Nigeria, where several armed groups are active, including the "Niger Delta Avengers" that target gas and oil pipelines in the region, as well as ISIS and Boko Haram in West Africa.

3- Egypt

Egypt is another destination that European countries can resort to, especially after the large investments that Egypt has allocated in the field of natural gas  in  recent years, as Egypt has expanded significantly and pumped huge investments in extracting, renovating and increasing the efficiency  of natural gas fields, and its reserves reached 200 trillion cubic meters.

Egypt ranks 11th globally among the largest producers of natural gas, and if you can work with your hope, its natural gas production will reach 8 billion cubic feet per day.

According to a report issued by the Organization of Arab Petroleum Exporting Countries, Egypt recorded the largest year-round growth in LNG exports in East Africa with 1.4 million tons of liquefied natural gas in the second quarter of 2021 compared to the absence of LNG exports in the same period in 2020. LNG is the only gas that Egypt currently exports.  in the country is not yet connected to a pipeline network with Europe.

Egypt sees China as a reliable resource, so it seeks to preserve it, as China has long-term contracts with Egypt, and Europe must follow China's example with Egyptif it wants to obtain Egyptian gas.

Recently, Egyptian Prime Minister Mostafa Madbouly witnessed the signing ceremony of a framework agreement for cooperation in the field of natural gas and its export between the Egyptian Natural Gas Holding Company (EGAS) and the Italian company Eni. This agreement aims to optimize the exploitation of Egyptian gas reserves by maximizing joint production between the two sides, which contributes to increasing exports of liquefied gas shipments from the Damietta gas liquefaction plant to Italy and Europe.

Libya

Europe recently turned to Libya asking it to increase the production and export of natural gas to it, and in response, the Libyan Minister of Oil and Gas announced that Libya does not have sufficient reserves commensurate with any increase in production that would be able to make any difference.

Although Libya has reserves estimated at 1.4 billion cubic meters in 2020, it is politically divided enough to be absent from Germany's list of exporting countries.

Another obstacle is the lack of adequate infrastructure to increase exports.