Europe could be left behind as IEA warns of complete Russian gas cut

Russia could completely cut off gas to Europe as it seeks to bolster its political clout amid the Ukraine crisis, the head of the International Energy Agency (IEA) has said, adding that Europe had to prepare now.

“I wouldn’t rule out Russia continuing to find different problems here and there and continuing to find excuses to further reduce gas supplies to Europe and maybe even cut them off altogether,” the executive director of IEA, Fatih Birol, in a press release.

“That’s why Europe needs contingency plans,” Birol added, saying a recent reduction in flows could be an attempt to gain political clout ahead of the winter months in strong demand.

However, the IEA does not consider a complete shutdown to be the most likely scenario, he added.

The European Union has sanctioned Russian oil and coal, but refrained from banning gas imports, in part because of its heavy reliance on supplies from Moscow.

In terms of total energy investment for 2022, the IEA said in a report that $2.4 trillion was to be invested in the sector this year, including record spending on renewable energy.

However, he added that this was not enough to close a supply gap and tackle climate change.

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Up 8% from a year earlier when the pandemic was more severe, the investment includes big increases in the power sector and efforts to bolster energy efficiency, he said. in its annual investment report.

Investments in oil and gas, in addition to setting back efforts to meet climate goals, could not meet growing demand if energy systems were not retooled towards cleaner technologies, he said. .

“Today’s oil and gas spending is caught between two visions of the future: it’s too high for a trajectory aligned with limiting global warming to 1.5°C, but not enough to meet growing demand. in a scenario where governments stick to current policy parameters and fail to deliver on their climate promises,” the agency said.

Redirect Russian trade and oil

As Western countries cut ties with Russian trade and oil, Russia is reportedly shifting its energy exports to countries in the BRICS group of emerging economies.

BRICS countries include Brazil, Russia, India, China and South Africa.

In order to resist the sanctions, Russia is trying to forge closer ties with Asia, seeking to supplant the markets it has lost in the feud with the European Union and the United States.

In a video address to BRICS Business Forum attendees, President Vladimir Putin said Russia is discussing increasing the presence of Chinese cars in the Russian market as well as opening Indian supermarket chains.

“In turn, Russia’s presence in the BRICS countries is growing. There has been a noticeable increase in Russian oil exports to China and India,” Putin said.

According to data from China’s General Administration of Customs, China’s crude oil imports from Russia rose 55% year-on-year to a record high in May, supplanting Saudi Arabia as the world’s largest. main supplier to China, as refiners cashed in on cut-price supplies.

Putin also said Russia is developing alternative mechanisms for international financial settlements jointly with its BRICS partners.

“The Russian financial messaging system is open for connection with banks from BRICS countries. The Russian payment system MIR is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the BRICS currency basket,” said he declared. .

Reuters/ABC