PARIS, FRANCE – Europe must ramp down gas consumption to survive the winter given perilously low stocks amid fears of a total cut off of Russian supplies, the International Energy Agency said Monday.
Prices have exploded over recent months with a slump in Russian provision — Moscow’s riposte to sanctions imposed for invading Ukraine — leaving Europe to seek alternative sources, led by massive procurement of imported liquified natural gas (LNG) from Norway.
The IEA warned of “unprecedented risks” of shortages unless demand is reined in, estimating cuts of nine percent are needed compared with the average of the past five years if the continent is to make it through to the spring with “adequate” provision.
The Paris-based IEA said diversification had at least enabled gas stockage facilities to stand at almost 90 percent of capacity at the end of September but warned of the potential consequences of an entire shutoff of Russian pipeline taps.
A complete Russian shutoff from November 1 would require demand to drop 13 percent to sustain adequate storage levels in the context of an “artificial scarcity,” the IEA said.
It warned that in such a scenario, “implementing gas saving measures will be crucial to minimize storage withdrawals and keep inventories at an adequate level until the end of the heating season”.
“Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies -– not just in Europe but also in emerging and developing economies,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, given current “extreme” price levels.
Overall gas consumption fell over 10 percent across Europe — and 15 percent in industry — between January and August compared with the same period last year, as many firms cut production to allay soaring fuel costs, the IEA said.
Demand for LNG meanwhile soared by almost two thirds in 2021, compared with a seven percent fall in the Asia-Pacific region on a combination of high prices, clement weather and China’s strict zero Covid policy.