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Russian energy dominance over Europe and what it means amidst the Ukraine crisis

Russian energy dominance over Europe and what it means amidst the Ukraine crisis thumbnail

Russia’s invasion of Ukraine has delivered massive shocks to the European energy markets and as the situation escalates, uncertainty is likely to fuel further disruptions. Here’s an infographic representation of how European countries are dependent on Russia for their energy requirements.

In the wake of Russia’s invasion of Ukraine, energy prices have skyrocketed, leaving many European countries uncertain of their ability to meet demand in the medium to long term. While the potential of Russia cutting off supply is at an all-time high, as of now, the pipes continue to flow. Europe is Russia’s main market for energy exports, and in turn, also its main source of revenues. Acknowledging the mutually dependent relationship, Western sanctions have largely bypassed Russia’s energy sector resulting in a paradox in which Europe seems on the precipice of war with the Kremlin while continuing to trade with it in key commodity markets.

How much does Europe depend on Russia

Russia is the world’s second-largest producer of petroleum after the United States although, at times, its position fluctuates with that of Saudi Arabia. Russia produces close to 11 million barrels of crude oil per day, of which roughly half the output is used to meet domestic demand. About half of Russia’s oil output is shipped to European countries and another large chunk goes to China.

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Europe has more flexibility in terms of its oil supply relative to that of natural gas. This is because gas requires complex infrastructure to store and transport whereas oil is easier to replace from elsewhere. Many countries and regions produce crudes similar in quality to Russian oil and OPEC typically maintains large reserves of spare capacity. While Russia holds more leverage when it comes to natural gas, it earns far more from oil. In 2021, Russia earned over $110 billion from oil exports, twice as much as its earnings from natural gas sales abroad.

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Europe gets around a quarter of its energy from gas. In 2019, Russia provided 41 per cent of that gas. With abundant gas reserves and an extensive existing pipeline network, Russia dominates the EU’s gas markets, with the bloc’s next largest source, Norway, accounting for 16 per cent.

In 2021, energy prices increased due to limited supply and over the last month, have once again risen substantially. The natural gas spot price at the Title Transfer Facility in the Netherlands has been trading at an all-time high and the price of Brent crude, the international benchmark, hit its highest since 2014.

Based on predicted energy prices, the IMF has forecast that growth rates in advanced economies would drop from 4.4 per cent last year, to 3.5 per cent in 2022. Additionally, the global consultancy Capital Economics warns that an increase in prices could raise inflation by an additional 2 per cent, pushing rates in many countries to a dangerously high 10 per cent.

Has Europe become less dependent on Russian oil and gas over time? 

Simply put, not really.

Russia, Ukraine, Ukraine crisis, Ukraine conflict, Russia Ukraine war, Russia Ukraine latest news, Russia Ukraine news, Russia natural gas, natural gas Europe and Russia, world news,current affairs, Indian Express Source: Graph created by the US Energy Information AdministrationThe dependency rate shows the extent to which an economy relies upon imports in order to meet its energy needs. According to the US Energy Information Administration, in the EU in 2019, the dependency rate was equal to 61 per cent, which means that more than half of the bloc’s energy needs were met by net imports (from all sources.) While some countries like Estonia are almost completely insulated from Russian energy, others, like Malta and Luxembourg import most of their energy, a lot of which comes from Moscow. This is particularly true for natural gas.

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Russian natural gas supply to Europe has remained largely consistent in the last decade while domestic production has dwindled significantly. Barring brief periods, notably during Russia’s annexation of Ukraine in 2014, its supply of natural gas to Europe has remained fairly consistent.

Europe’s natural gas production has been in continuous decline because of production limits in key sites like the Groningen field in the Netherlands along with other initiatives to phase out gas in the region. The decline is also a result of resource depletion and downturns in output in the mature fields of the North Sea. While some of these policies were put in place to encourage greater transition into domestic renewable energy production, it has resulted in an increased dependency on Moscow.

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As we see in the graph above, most sectors have failed to diversify away from natural gas, barring the electric power sector which fell between 2010 and 2014 as a result of increasing penetration of renewable energy in electricity generation. However, countries struggle to transition directly from coal to renewables, needing natural gas, a reliable and efficient source of energy to fill the gap. Therefore, as Europe began to retire coal-fired plants in 2016, and in particular, as Germany retired nuclear power plants, consumption of natural gas in Europe’s electric power sector increased.

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Since 1965, Europe has vastly reduced its consumption of coal and oil but while renewables can account for some of the loss, it’s clear that gas has done the heavy lifting.

How would Russia shutting off gas flows impact Europe? 

First off, Ukraine is likely to be hit hardest given its dependence on Moscow both for energy and for income through pipeline fees. Moscow is no stranger to using energy as a geopolitical weapon in its skirmishes with Ukraine. Until the mid-2000s, Ukraine was receiving the same heavily subsidised gas shipments as it did when it was part of the Soviet Union but following the 2004 Orange Revolution that denied the pro-Russian candidate the presidency in Ukraine, Russia’s largest gas producer Gazprom demanded that Ukraine pay full market rates.

Although Russian pipelines almost exclusively passed through Ukraine during the Soviet era, since then, Russia has invested in infrastructure that bypasses Kyiv. Most notably, it constructed the Nord Stream pipeline to deliver Russian gas directly to Germany. Opening in 2011, the pipeline reduced Russia’s reliance on Ukraine, and resulted in the annual loss of transit fees for the latter amounting to $720 million.

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In the last month, Russian gas flowing through Ukraine has been extremely volatile with peaks and lows corresponding with key dates of the conflict. Ukraine earns an annual $1 billion in transit fees from Russian pipelines and was particularly hard hit last year when gas delivered to Europe from Russian pipelines fell by 25 per cent.

The rest of Europe will also be destabilised if Russia were to hamper or cut off supply. In the past, it has fulfilled its contractual obligations even in times of conflict but has ceased providing excess supply that many countries rely on in the cold winter months. This time, with a particularly bullish Putin at the helm, countries are bracing themselves for even worse.

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As the conflict escalated in 2021, Europe’s reliance on Russia decreased and its imports of LNG from other sources increased by 146 per cent.

The EU has said that it would be able to cope with a partial cut-off of gas and has spoken with the US, Qatar, Egypt, Azerbaijan and other countries about increasing deliveries of Liquified Natural Gas (LNG.) Already, exports of LNG from the US increased almost twofold between November 2021 and January 2022. However, there are two substantial problems with relying on LNG. First, given its infrastructural requirements, it is far more expensive (up to 40 per cent) than gas flowing through pipelines. This is because LNG must first be turned into a liquid and then de-gassed at terminals, usually near the coast, before it can be used to power homes.

There is also an acute shortage of supply. The biggest exporters of LNG are already exporting at near full capacity and it takes a long time to expand liquefaction and export capacity, so Europe’s best short term hope would be to get hold of existing cargos headed for elsewhere. However, there is high demand for natural gas in Asia as well, with China being the world’s biggest importer.

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Storage is an additional concern. Last year’s brutal winter along with Gazprom’s reluctance to fill storage units, left gas storage at levels below the five year norm. Analysts debate how much the storage capacity could mitigate a Russian cut-off, with some predicting two months and others, up to four. If the region were forced to consume its gas stocks to survive, it would then have to spend even more during the summer to build up reserves. Already, JP Morgan predicts that without a shut off, Europe will spend $1 trillion on energy this year, up from $500 billion in 2019.

Conversely, cutting of gas supplies to Europe would also affect Russia. A complete cut off would cost Gazprom between $203 million and $228 million a day, resulting in $3 billion in lost revenue over three months. If the embargo continues into the summer months, Putin also loses leverage as demand drops down to 60 per cent that of January. However, Russia has built up all-time high foreign exchange reserves and very low sovereign debt that would help Russia weather this storm.

Indian Express



24 Comments on "Russian energy dominance over Europe and what it means amidst the Ukraine crisis"

  1. EvilIsMyNewName on Tue, 8th Mar 2022 11:21 am 

    Last I was sitting on the toilet bowl, passing a big turd, then I looked at my hand. It looks like it was vanishing. We are just starting torturing you to death. This is nothing.

    Evil is my new name. You evilness is nothing compare to me and I will prove it to you.

    https://electroverse.net/jan-like-cold-targets-u-s-new-study-questions-explanation-for-feb-2021s-freeze-ukraine-halts-all-exports/

  2. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 11:37 am 

    I just saw a bitch walking her dog on my street. The dog look like a fake holographic projection and the dog had a elongated neck. I am really starting to have fun destroying earth.

  3. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 11:39 am 

    More people with facial skin cancer. Wait until he starts bleeding from his face becouse of cancer, 0:46

    https://www.youtube.com/watch?v=58Q2k0Kh_Gs

  4. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 11:46 am 

    I think we need to start modifying animal like we are doing with aliens walking on two feet. What about animals, like cats and dogs with bigger eyes and longer neck.

    I spoke with some cats and dogs, and they feel left out because they are not getting body upgrade and modification like longer neck and bigger and totally black eyes. We have to think about the animals also.

    My evilness is nothing compare to yours, I will prove it to you controllers of the earth.

  5. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 11:53 am 

    I told you, controllers of the earth, that we will kill and the none humans on earth just to teach a lesson to the whole universe. You have not seen anything yet in term of pain and misery we will put on the aliens of this earth. You have not seen anything yet. Wait until we modify cats and dogs and create a new specie of cats and dogs.

    My evilness is without border and limits, you evilness is nothing. I am motivated by hatred and revenge against you.

  6. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 11:59 am 

    Bow in front of me, your kind and executioner.

    https://www.youtube.com/watch?v=KIg3N4PF3Bc

  7. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 12:11 pm 

    I just finish speaking with all kinds of animals. they feel left out. I think we need to modify all they existing animals and give them an upgrade: cats, dogs, bears, polar bears, birds, snake, rabbits and the rest of them. They need new eyes, neck and face modifications. Why not have fund with earth, before we totally destroy it.

    You will regret messing with me.

  8. GoFuckYourself on Tue, 8th Mar 2022 1:06 pm 

    I was outside looking at the sun. I see the same energy cone made of particles circling it and holographic projection on the top and bottom of it. The center of the sun is vibrating and the color of sun is fluctuating, sometime turning black in the middle.

    The neighbor is starting to look abandoned, with curtain misplaced in the front window, shovel about in the front yard. and two house are empty. Don’t what happened to the people living there. It is starting to look like an empty neighborhood.

  9. GoFuckYourself on Tue, 8th Mar 2022 1:14 pm 

    The fucking skin on my hands seem to become younger. All the defects on my hands are disappearing, warp are disappearing, skin is yellowish-whitish without any defect. My hands look unreal. The skin on my hands is smoothing out.

  10. GoFuckYourself on Tue, 8th Mar 2022 1:17 pm 

    I also heard different buzzling sound in my ears. Sometime the tone of the buzzling change to something else.

  11. GoFuckYourself on Tue, 8th Mar 2022 1:28 pm 

    Before I could only see the holographic energetic projection of my LED display (TM1638) at night. Now I can see some of them during the day.

  12. GoFuckYourself on Tue, 8th Mar 2022 1:35 pm 

    I also see the holographic energy coming to my LCD yellows display. One of my project box is on the floor in mu kitchen. I see one energy holographic below the display and one on top of the display. I can see them now during the day, before I could only see them at night.

    https://www.aliexpress.com/item/1005003768509827.html?spm=a2g0o.productlist.0.0.638c79485DJk12&algo_pvid=99780ed3-dee9-49c9-94b1-0d5d0d0fe9f4&algo_exp_id=99780ed3-dee9-49c9-94b1-0d5d0d0fe9f4-5&pdp_ext_f=%7B%22sku_id%22%3A%2212000027099603071%22%7D&pdp_pi=-1%3B2.33%3B-1%3B-1%40salePrice%3BCAD%3Bsearch-mainSearch

  13. theedrich on Tue, 8th Mar 2022 1:39 pm 

    Ukraine: Euro-choice between ideals and reality. If the European elites choose to cut their countries off from Russian gas, their economies will collapse.  And the demigods will lose their elite status.  America, meanwhile, is using as propaganda videos of fleeing Ukrainian refugees to further its goal of destroying Russia through psywar.

    Although the Russian forces in Ukraine seem to be having a hard time due to U.S.-supplied weaponry used by the locals, those forces still seem to be making headway, especially since Yankeeland has by now shot most of its wad.  Having cut Russia’s economy off from Western financial systems, and having produced anti-Russian hysteria everywhere, there is not much more that the Washington elites can do to distract the masses from their own corruption.  Moscow does not seem to be buckling under to American strategic moves, either psychological or military.

    As Gail Tverberg has explained, the world as a whole is coming up against the physical fact that all of the “easy,” cheap petroleum has been exhausted.  And there is in fact no deus ex machina — such as windmills, solar panels or nuclear fusion — to save us, despite what the politicians keep promising.

    Reality is hard.  America was built on the premiss that facts could be ignored, that, quite literally, absolutely anything could be accomplished.  Yet today, the top shills talk about settling the planet Mars, a schizoid idiocy if there ever was one.  But it is typically American, and of the type that politicians love to use.

    In reality, the days of wine and roses are past.

  14. GoFuckYourself on Tue, 8th Mar 2022 1:39 pm 

    I see so much more holographic energy source when I removed my glass, even if I have myopia. The glasses filter out some of the holographic energy sources.

  15. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 2:24 pm 

    I have two neighbors talking in front of my house. One is wearing a grey coat. He looks like a to 2D holographic projection. The fucking guy with a grey cost did not move for 10 sec. He looked like a 2D carboard cut on frozen in time for 10 sec..

  16. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 2:30 pm 

    Last night I was feeling like I had no floor under my feet. I was walking and moving like a heavy drunken man. I feel all fuck up now. It is almost like I have a empty head made of only energy and no flesh in it.

  17. FacialSkinCancerEverywhere on Tue, 8th Mar 2022 2:33 pm 

    Apparently I can now look directly at the sun without damaging my eyes.

  18. GoFuckYourself on Tue, 8th Mar 2022 3:28 pm 

    This earth is design to voluntary inflict physical and mental pain on humans living here.

    AI has what I called and entropic decay program. Everything decay and break rapidly. You buy a car, it starts to rust right away, You buy a house your window start to decay almost within 2 to 3 year. You always have to fix and repair everything here in order to stay alive, putting you in a state of continuous mental stress. This is earth is designed to remind you that you can die at any time.

    Your evilness is nothing compare to ours. You have not seen anything in term of the cruelty that we are capable of.

  19. GoFuckYourself on Tue, 8th Mar 2022 3:31 pm 

    Why do you think we have combat sport on earth. It is there to put humans in a state of mental stress and remind you that you can die at any moment.

    You find the entities behind this, and you exterminate all of them. It is the only way to deal with such entities.

  20. GoFuckYourself on Tue, 8th Mar 2022 3:38 pm 

    If you are on earth and have covert yourself with a fake human holographic coat you are guilty and will be sentence to a long a painful dead. This is how we are going to deal with you from now on.

  21. GoFuckYourself on Tue, 8th Mar 2022 3:41 pm 

    You started WW1 and WW2 to torture humans, now it our turn to start a war to torture the none humans living on earth.

  22. GoFuckYourself on Tue, 8th Mar 2022 3:45 pm 

    We are going to torture you in so many ways. This is just one example below. We are voluntary creating energy shortage, just to have the pleasure to torture you to death.

    EU rolls out plan to end dependency on Russian gas; UK to phase out Russian oil by end of 2022

    https://www.youtube.com/watch?v=O1jsnKWZCsU

  23. Biden’s hairplug on Tue, 8th Mar 2022 4:52 pm 

    https://twitter.com/NickGriffinBU/status/1501326970344198144

    The face of pure evil.

    The goed news: their intended destruction of Russia failed miserably.

    Fuck you, kike!

  24. Biden's hairplug on Wed, 9th Mar 2022 1:30 am 

    https://twitter.com/NickGriffinBU/status/1501231480688631812?s=20&t=Mpi-0nV4rtoODbfpkN8waw

    Wind energy here to stay:

    https://www.offshorewind.biz/2022/03/08/nearshore-wind-farm-to-be-dismantled/

    After 25 years of service, a nearshore wind farm is to be dismantled in the Netherlands. 28 turbines or 16.8 MW are to be replaced by 34 new turbines of 132 MW in total, or 8 times as much power. The old turbines and towers are to be 100% recycled. They probably could have gone on for decades, but their economic lifetime had ended.

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