Who shivers if Russia cuts off the gas?
Markets are fretting about the prospect of western sanctions on Russia but Europeans will also suffer heavily from any retaliatory trade embargoes from Moscow which supplies roughly a third of the continent’s gas needs – 130 billion cubic metres in 2012.
After all, memories are still fresh of winter 2009 when Russia cut off gas exports through Ukraine because of Kiev’s failure to pay bills on time. ING Bank analysts have put together a table showing which countries could be hardest hit if the Kremlin indeed turns off the taps.
So while Hungary and Slovakia depend on Moscow for over a third of their energy, Germany imported less than 10 percent of its needs from Russia while Ireland, Spain and the United Kingdom received none at all in 2012, ING’s graphic shows. So while the main impetus for the sanctions comes from the G7 group of rich countries, it is central and Eastern Europe who will be in the firing line.
ING analysts point out that Western European countries are also more able to source alternative gas supplies, say in the form of LNG shipped on tanker from Qatar or Algeria:
What experts on the gas supply network suggest is that central and eastern europe is less well-shielded from interruptions to Russian/Ukrainian gas supply and also has fewer back-up options in terms of diverted supply from other regions of Europe.
Recent supply disruptions from Norway and Libya have underscored Europe’s reliance on foreign, especially Russian, gas. The countries are aware of their predicament. Slovakia for instance has started ramping up gas imports from Germany through the Czech Republic to preserve its buffer stocks. Also, on the positive side is the fact that the Northern hemisphere winter is almost over, which means gas demand will gradually ease. What’s more the winter was a mild one so regional gas stocks are 10 billion cubic metres, or almost 40 percent, higher than this time last year. Hopefully any supply disruptions will be resolved before winter comes around again.