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With Russia threatening a new invasion of Ukraine, US and EU officials have been working on contingency plans to identify alternative energy supplies for European consumers in case Moscow disrupts westward deliveries of oil and gas
FREMONT, CA: While only Vladimir Putin knows exactly whether such disruptions are being considered, given the high stakes of the current geopolitical conflict, natural gas, oil, and fossil fuel-derived products supply disruptions cannot be ruled out. Any such action would send shockwaves through the global financial markets.
The timing and scale of any reductions in Russian energy supplies would determine Europe's vulnerability. In the most severe situation, and almost certainly only in response to crippling Western sanctions, Russia could halt all supply during peak winter demand. Natural gas flows would be curtailed along all four routes supplying Russian gas to Europe, including Ukraine and Poland, as well as the TurkStream and Nord Stream sectors.
Winter in Europe is about 30percent higher than the rest of the year, with daily consumption hovering around 1.8 billion cubic metres. LNG imports have been surging, totalling an estimated 11 billion cubic metres, according to global data and news provider ICIS, since Russian gas exports were limited to roughly 249 mcm/day in January due to reduced supply through Ukraine and no deliveries via Poland.
In January 2022, the United States supplied half of all LNG to Europe. This has helped to compensate for the nearly two-thirds decline in Russian gas supplies through Ukraine compared to the daily capacity that Russian producer Gazprom was anticipated to use this month.
It might be conceivable to boost the import capacity of LNG terminals by a slight margin if Russia halted shipments. Nonetheless, the majority of the new volumes would go to consumers in western Europe, with far less going to eastern European countries, particularly those without their LNG import ports.
Ukraine, which would rely on gas diverted from central Europe, as well as neighbouring Romania and Moldova, both of which have inadequate import facilities, would be among the most vulnerable countries.
