Europe's reliance on Russian gas flow hits another tense crisis point today, as a partial return of services to Germany highlights the urgency of reducing long term dependency.
The complex interplay of energy resource battles amid Russia’s war in Ukraine continues in Europe this week, where 40 percent of Germany’s supply needs began flowing again through the Nord Stream 1 pipeline this Thursday. The initial service break by Russia’s state-owned energy company, Gazprom, was claimed as the result of routine maintenance involving the absence of a key turbine. The German government does not believe that excuse, and Brussels joins the country in suspecting Russian retaliation over Western wartime sanctions.
While Europe is currently enduring heatwaves, the greatest concern for energy restrictions lies with how Germany and other European countries will handle the coming winter. Through its representative on the EU Commission, Brussels has called for the EU to slash its gas dependency by 15 percent between August 1, 2022 and March 31, 2023. As EU Commission President Ursula von der Leyen said, “Russia is blackmailing us. Russia is using energy as a weapon. … We have to be proactive.”
On Tuesday, the International Monetary Fund released a working paper on the potential implications of further disruptions in Russian gas flow for European industries. The report notes a high risk of gas shortages and diminished GDP for Hungary, Slovak Republic, and Czechia, with Austria, Germany, and Italy also at risk during bottleneck events in the coming months.
The IMF working paper’s authors elsewhere noted that, while up to a 70 percent reduction could be managed through alternative arrangements, the distribution network remains uneven, which could yield bottlenecks and shortages of anywhere between 15 and 40 percent in different European blocks. They further argue that countries choosing crisis policies that limit how wholesale prices are passed on will not be enough to encourage conservation of use.