Europe will face 'unprecedented risks' in terms of natural gas supplies this winter. That's according to a report by the International Energy Agency, AP reports.
The European Union countries will have to reduce gas consumption by 13% during the winter in the event of a complete halt in supplies from Russia. Much of this reduction will have to do with consumer behavior, such as lowering the temperature of thermostats by 1 degree and adjusting the temperature, as well as the need for conservation of industrial and utility plants.
Another danger the report points to is a sudden cold snap at the end of winter. The EU is already 88% full of storage. The IEA suggested that 90% would be needed in a Russian supply disruption scenario.
Businesses in Europe have already reduced their use of natural gas, sometimes simply abandoning energy-intensive activities such as steel and fertilizer production, while smaller businesses such as bakeries are feeling severe cuts in their costs.
High prices for gas, which is used to heat homes, generate electricity and a host of industrial processes, have led to a record 10% consumer inflation in 19 eurozone countries and so undermined consumer purchasing power that economists predict a recession later this year and early next year.
European governments and utilities have made up for much of Russia's gas shortfall by buying expensive reserves of liquefied natural gas, which is shipped by sea from countries such as the United States and Qatar, and by increasing pipeline supplies from Norway and Azerbaijan.
The goal is to prevent storage levels from dropping so low that authorities have to ration gas to businesses. According to the IEA, gas storage levels must remain above 33 percent for a safe winter, while levels below that level could lead to gas shortages in the event of a late cold snap.
Lower levels would also make it difficult for Europe to replenish storage next summer, while higher reserves would help reduce extremely high prices.
Demand for liquefied gas has driven up prices and reduced supply to the point where poorer Asian countries cannot afford it. Bangladesh is experiencing massive blackouts, while Pakistan has imposed reduced working hours in stores and factories in addition to permanent rolling blackouts to save power.
Interregional competition in LNG purchases could create additional tensions, as additional European needs would put more pressure on other buyers, particularly in Asia, and conversely, cold weather in Northeast Asia could limit Europe's access to LNG, the IEA said
Europe's gas crisis has also deprived Asian countries of a limited number of floating regasification terminals that were supposed to play an important role in importing LNG to Southeast Asia.