Kerem

“Cold War”

By Kerem

While the war in Ukraine is continuing in its all heat, a new conflict has emerged in Europe. However, this time it is not waged with cold barrels, but with empty pipelines. Since the beginning of the conflict, Russia has been trying its best to break the solidified unity among the European nations with all of its means, including its natural resources. Especially with natural gas, which is a vital need for many European countries. But why? Why does Europe need Russian resources? Aren't there any alternatives? And what will this winter be like?

Why does Europe need Russian gas?

Russia on its own was supplying 40-50% of the European Union's natural gas demand and 25% of Europe's oil demand. Due to this situation, none of the European states could cut Russia off except the Baltic states and the United Kingdom. Since the beginning of the invasion of Ukraine, Russia has been steadily decreasing the amount of natural gas that is being transferred to Europe. There are 4 pipelines transferring natural gas to Europe: Nord Stream, the Yamal-Europe pipeline, the Ukrainian Transit System and Turk stream. The first of these to be shut down was the Yamal-Europe pipeline going through Belarus and Poland after the Polish and Bulgarian governments refused to pay in Russian rubles in April. Subsequently, Ukraine decided to reduce the gas flow through the Ukrainian Transit System in May and lastly in August, when Nord Stream was shut down completely. This means that 75% of the natural gas export from Russia to Europe is now halted. As a result of these events, the price of natural gas has increased by 60%, which is 10 times the historic baseline.In context, 50% of the households in the European Union are heated by natural gas and 24.4% of the European Union's energy demand has been supplied by Russia. Furthermore, unlike oil, which is mainly transferred by barrels, natural gas requires transfer by pipeline or as LNG (liquified natural gas) which is much more expensive and also requires special facilities.

Aren't there any alternatives?

LNG was the very first alternative that came to mind. Although due to a lack of facilities for its processing and prohibitive cost, the purchased amount has considerably increased. As expected, this sudden demand has also been met by a significant rise in market prices. Along with this, there are also some other alternatives such as the natural gas supplies that come from Central Asia and Africa. However, due to the decades-long dependency on Russia, these alternatives are either underdeveloped or not even developed at all to be capable of replacing Russia. Nevertheless, countries like Spain and Italy receive 40-50% of their demand from Africa. Moreover, Nigeria has the 9th largest natural gas reserve in the world and in a situation where the Trans-Saharan pipeline (from Nigeria to Algeria) is built, it could supply 10% of Europe's gas demand on its own. Together with the current Algerian gas supply, Africa could supply more than 20% of Europe's demand. In the case of the Trans Caspian pipeline, which goes through the Caspian Sea, there are two issues. The first one is a lack of capacity, as it can only supply 3% of European demand. The second one is the Russian influence in the region, which would prevent any further development of the pipelines for a larger capacity. As a consequence, the European Union has set up some goals, such as a 5% mandatory energy consumption reduction, a 10% voluntary energy consumption reduction and a voluntary 15% gas consumption reduction target for this winter. Along with these, the European Union has also made a law that requires Europe's gas storage to be at least 80% full by November.

What will this winter be like?

Even though it is still difficult to foresee the future, Europe seems to be winning the first round of this fight. Thanks to Europe meeting its goal of at least 80% gas storage and even exceeding it by 94%, the stock market prices of LNG have decreased by 80%, even to negative rates. As a consequence, many LNG suppliers had to pay in order to free their transport ships as it cost them much more to keep them in European ports. This being said, the war over energy is still continuing, as the stored amount only equals 1000TWh of energy. Considering the fact that Europe's gas consumption was 600TWh in January last year, it is not a lot. Besides this, there has been an unseen amount of suspicious activity affecting European energy and technology infrastructure. For example, in early October there was a leak in Nord Stream pipelines, meanwhile, some drones were spotted near Norwegian gas facilities. In a matter of a few days, Germany's train infrastructure was sabotaged, and a few weeks subsequently, both of the undersea cables that were leading to the Shetland Islands were damaged in the same week. Lastly, on October 15, three undersea fiber-optic cables in southern France were sabotaged. Individually, these events do not raise suspicion but the fact that they happened in such a short amount of time suggests a possibility of a Russian escalation in response. So for now, a crisis has been averted even though the gas prices are still 6 times higher than prior to the invasion. Moreover, there are likely to be some campaigns and policies to decrease gas usage.

All things considered, this winter will still be a tough one. However, many decades ago, in the darkest hour of Europe, people of this continent shouted their will to fight for their dignity. They said we should fight on beaches, on the landing grounds, in the streets, on the hills and never surrender. We owe these people our freedom today. For the darkest hour to never come again, for future generations to be able to live in a free world, we shall also fight this aggression in our homes, in our schools, in our offices and we shall never surrender, just as our grandparents refused to.

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