As Boris Johnson told parliament that Europe must wean itself off Russian gas – to loosen Vladimir Putin’s “grip on western politics” – the Nikolay Zubov tanker was making its way back from British waters to the port of Sabetta, in northern Siberia.
The 300m-long vessel had recently dropped off a consignment of liquefied natural gas (LNG) at the Isle of Grain terminal, in the Thames Estuary, operated by the National Grid.
Steaming north under a Cypriot “flag of convenience”, it charted a course for Russia’s Arctic coast, near the vast $27bn (£20bn) Yamal gas facility, personally inaugurated by Putin in 2017.
Britain gets less than 5% of its gas from Russia, either flowing through subsea interconnector pipelines or arriving by boat at the Isle of Grain and two further LNG facilities at Milford Haven, South Wales.
In the EU, whose gas market is so intermeshed with Britain’s that it effectively determines the prices paid by UK end users, the picture is very different.
Russia exports between 150bn and 190bn cubic metres of gas to Europe each year, typically fulfilling 30-40% of demand across the continent.
It accounts for 65% of imports into Europe’s economic powerhouse Germany and 100% for countries such as Latvia and Czech Republic.
The obstacles to replacing Russian supplies are logistical, financial and political.
So, if Europe – and by extension the UK – want to reduce their reliance on Putin’s pumps, what are the options and how feasible are they, particularly in the short term?
Liquefied natural gas
LNG is super-chilled gas, condensed into liquid form and transported by ship and “regasified” at specialist terminals.
Ports including Milford Haven and Grain – Europe’s biggest LNG terminal – take regular shipments. In 2020, Russian LNG accounted for 3% of total UK gas supply and, so far at least, there is no sign of shipments being affected by sanctions.
European ports including Montoir-de-Bretagne in France, Zeebrugge in Belgium and Rotterdam in the Netherlands have also welcomed Siberian visitors of late. Figures provided by Argus show that Russia has supplied 16% of Europe’s LNG since February 2020.
But Russia doesn’t come close to being one of the biggest LNG exporters, a list headed by the US, Qatar and Australia. Qatar is reportedly willing to increase LNG exports to Europe and, even now, shipments of LNG from the US are moored off Milford Haven, at the South Hook and Dragon terminals.
On paper, Europe has the capacity to import an extra 147bn cubic metres of LNG a year, according to analysts at Wood Mackenzie, enough to replace Russian pipeline gas entirely.
But Wood Mackenzie’s European gas analyst Graham Freedman said the switch would take “at least a decade” in practice, not least due to a lack of onward infrastructure in the right place. Germany, Europe’s biggest gas market, has no LNG import terminals.
Even a temporary switch would be hugely expensive.
Tom Marzec-Manser, lead European gas analyst at energy consultancy ICIS, pointed out that LNG production is limited and consignments go to the highest bidder. European countries already wrestling with sky-high prices would have to outbid increasingly gas-hungry Asian economies.
“It’s an incredibly expensive short-term gap filler,” he said.
Alternative pipelines
Britain and Norway’s North Sea fields, not to mention onshore resources in the Netherlands, contain sizeable reserves but scope for upping the flow is limited.
Marzec-Manser said Norwegian state energy firm Equinor has raised production but there’s “not much more they can do”. UK North Sea output is already on the decline, with limited headroom for a short-term increase.
The Netherland’s’ vast Groningen field is an option in theory but probably not in practice, say analysts at Jefferies. It could provide 13bn cubic metres, equivalent to 9% of Russian supply. But the Dutch government is winding down production after drilling was found to be causing earthquakes. Reversing that decision looks politically unpalatable.
Nuclear power or coal
Nuclear power reduces reliance on gas for electricity and the UK generates up to 20% of its power that way. While much of the fleet is due to be retired by 2025, the government has thrown its weight behind rebuilding that capacity. But doing so takes time and does little to replace gas in cooking or heating homes.
France gets 70% of its power from nuclear energy, affording it much more protection from volatile gas prices. But Germany announced its withdrawal from nuclear power after the 2011 Fukushima disaster, and in 2019 said it would pull the plug on coal-fired plants. Those decisions have left it more dependent than most major economies on Russian gas.
In practice, Germany is unlikely to change its mind on decommissioning nuclear power stations. Given the climate crisis, few European countries are minded to turn back to coal.
Fracking
The UK government ordered a moratorium on all new fracking wells in 2019 but the gas price crisis has brought advocates out of the woodwork. They include Lord Frost – who presided over the UK’s Brexit negotiations – and Viscount Ridley, who chaired Northern Rock when it collapsed.
The idea is that the UK could mimic the shale gas revolution that has transformed the US into a net energy exporter.
Experts say otherwise – that fracking the way out of the Ukraine crisis doesn’t make geological, logistical, economic or political sense.
Michael Bradshaw, professor of global energy at Warwick Business School, points out that the UK’s reserves are harder to tap geologically than those in the US.
Unlike the US, potential sites are surrounded by densely populated areas that are governed by strict planning laws and populated by people who don’t actually support fracking, making it politically impossible.
Concerns about water and noise pollution persist and even if those were overcome, fracking would have vanishingly little impact on European wholesale prices, while also taking years to develop.
“By the time we did it, we probably wouldn’t need the gas,” said Bradshaw.
Renewables and home insulation
Ultimately, renewable energy and decreased demand, by improving home energy efficiency through better insulation, offers the most obvious long-term solution.
However, this depends on major investment and improvement in technologies such as battery storage, which makes up for the intermittency in supply from technologies such as wind power.
Marzec-Manser said that the Ukraine crisis might well motivate Europe to go hell for leather for a renewable future but that it is already moving faster than any other part of the world.
“It’s like trying to move into sixth gear when your car only has five gears,” he said.
