FACTBOX-What are Europe’s options in case of Russian gas disruption?

Band Nina Chestney

LONDON, January 21 (Reuters)Escalating tensions between Russia and Ukraine have heightened concerns in the European gas market over Russian supplies in the worst-case scenario of an attack that disrupts flows.

US President Joe Biden and other Western leaders have threatened Russia with economic sanctions if it attacks Ukraine.

Europe has already been dealing with lower than normal flows of Russian gas for several months. European politicians say Russia is using high gas prices as leverage in a dispute over the Gazprom-backed Nord Stream 2 gas pipeline project.

Gazprom claims that it respects the commitments made to European customers.

WHERE ELSE CAN EUROPE GET SUPPLY?

Europe depends on Russia for around 35% of its natural gas. Most of it goes through pipelines, including Yamal, which goes through Belarus and Poland to Germany, Nord Stream 1, which goes directly to Germany, and goes through Ukraine.

European gas markets are linked by a network of interconnected gas pipelines. Most countries have reduced their reliance on Russian gas over the years, while there are also more Russian supply routes bypassing Ukraine.

The Center for Strategic and International Studies (CSIS) said Ukrainian transit of Russian gas has been reduced by 70%, from over 140 billion cubic meters (bcm) in 1998 to less than 42 bcm in 2021.

Last year, Ukraine was a transit corridor largely for gas entering Slovakia, from where it continued to Austria and Italy, CSIS added.

But sanctions against Russia could impact flows through other pipelines such as the Yamal-Europe route through Belarus, Nord Stream 1 and TurkStream. Nord Stream 2, which is now complete, is awaiting regulatory approval before Russian gas can flow through it.

“It would be difficult for Europe to agree to sanctions that effectively cut off Russian gas supplies, or at least a large part of them, given the region’s dependence on Russian gas and the ongoing energy crisis.” , said ING analysts.

There are other options for some countries. For example, Germany, the largest consumer of Russian gas, can also import from Norway, the Netherlands, Great Britain and Denmark via gas pipelines.

But Norway, Europe’s second-largest gas supplier, is delivering natural gas to Europe at full capacity and that cannot replace missing supplies from Russia, its prime minister said this week.

For southern Europe, the Trans-Adriatic Gas Pipeline can transport Azeri gas to Italy, and the Trans-Anatolian Natural Gas Pipeline (TANAP) can transport Azeri supplies via Turkey.

Gas storage levels in Europe are still very low for the time of year, in one of the coldest months when demand is highest.

Europe’s energy chief said European countries have enough gas to meet their needs during the peak winter season until the end of March, but the question is how much they will have to pay.

Imports of liquefied natural gas to northwest Europe have increased significantly this month due to the higher price of Dutch gas – the European benchmark – compared to its Asian counterpart LNG, which has attracted more cargoes towards Europe.

Analysts expect this to continue until there is a spike in Asian demand that will drive LNG prices higher. LNG/

The European Commission has proposed a system for EU countries to voluntarily buy gas jointly to build up strategic reserves in response to soaring energy prices, but this would not be implemented in the short term.

GASLESS OPTIONS

Several countries have a range of options to bridge the gap, including electricity imports through interconnections from neighboring countries, or increasing electricity generation from nuclear, renewables, hydroelectricity or coal.

In some countries, however, such as Germany, Great Britain, Belgium and France, nuclear availability is decreasing due to aging plants, decommissioning, phase-outs and frequent shutdowns.

The European Union is under pressure to phase out coal-fired power to meet climate goals, so several countries have shut down old coal-fired power plants or are not building new ones.

Some countries keep power plants to light as a backup supply.

In past crises, some countries have introduced measures to reduce industrial production at certain times, pay for emergency generators to turn on the supply, order households to reduce their energy consumption or impose temporary blackouts.

HAS EUROPE’S SUPPLY BEEN DISRUPTED BEFORE?

There have been several disputes between Russia and Ukraine over the past 15 years over gas, mainly over the price Ukraine has paid for fuel under contracts.

In 2006, Gazprom cut supplies to Ukraine for one day. During the winter of 2008-2009, Russian supplies to Ukraine were disrupted due to disagreements over outstanding debts and prices, a situation that spread across Europe.

In 2014, Russia cut off supplies to Kyiv as part of Russia’s annexation of Crimea. Ukraine subsequently stopped buying Russian gas in November 2015.

Ukraine has reduced its dependence on direct gas imports from Russia through a reverse flow mechanism, allowing Ukraine to import from EU countries.

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(Reporting by Nina Chestney, Nerijus Adomaitis, Nora Buli, Vladimir Soldatkin, Stephen Jewkes, Jan Lopatka and Luiza Ilie; Editing by Jan Harvey)

((nina.chestney@thomsonreuters.com; +44 (0) 020 7513 5674; Reuters messaging: nina.chestney.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/NinaChestney))

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Mary I. Bruner