Employees at the primary processing facility for oil and gas supplies at the Salym Petroleum Development oil fields near the Bazhenov shale formation in Salym, Russia, walk under pipelines leading to oil storage tanks.
Italy has requested a new meeting to discuss the possibility of a complete shutdown of gas supplies from Russia, indicating that European leaders are becoming more and more concerned about the possibility of such a shutdown.
As a result of Gazprom, Russia‘s state-backed energy supplier, reducing its gas flows to Europe by approximately 60 percent over the past few weeks, several European countries, including Germany, Italy, Austria, and the Netherlands, have indicated that they may once again turn to coal for their energy needs.
It comes at a time when Europe, which receives approximately 40 percent of its gas via Russian pipelines, is attempting to rapidly reduce its reliance on Russian hydrocarbons as a response to the Kremlin’s assault in Ukraine that has lasted for nearly four months now.
“Russia is diminishing the supply of gas little by little,” Josep Borrel, the top diplomat for the EU, said in an interview with CNBC on Friday. “To some countries [by] almost 100 percent; to others, cutting 10, 15 percent,” Borrel said.
“I don’t think they are going to cut the gas overnight, especially considering that we are heading into summer and that during the summer the gas is not a strategic weapon. I don’t think they are going to do that.” But winter could be challenging, and we need to be ready for whatever comes our way in Europe.
Xavier Bettel, the Prime Minister of Luxembourg, responded to a question from CNBC about whether or not he was concerned that Russia could completely cut off gas supplies by saying, “I’m fully aware that they can.” They are able to. It is their choice, in addition to being a natural choice. They are able to either shut or open.”
He emphasised how important it was for all 27 member states of the EU to agree on their strategy for dealing with the issue. “In Moscow, a single person has the authority to decide on their own to cut off energy supplies to Europe.”
Roberta Metsola, the President of the European Parliament, stated on Thursday that the current situation was worrying.
Since the very beginning, we have had [concerns]. At the end of the day, some countries are more reliant on Russian gas than others. “Not just in the near and medium periods, but also for us as a whole, we need to find answers to that problem,” she stated.
According to three EU officials who did not want to be identified due to the delicacy of the topic, Italy has reportedly requested a meeting at the EU level to be held the following month in order to examine the energy and economic crises in greater detail.
Recession worries
The decrease in gas flows has increased the level of worry about the potential for the European Union to enter a challenging economic phase. This week, analysts at Berenberg said that the most recent decrease in gas prices meant that their new base case for Europe was one of a recession.
“Hit harder than the U.S. by the oil price shock,” analysts at Berenberg stated in a note that they published on Tuesday, they forecast that the eurozone economy will enter recession before the U.S. economy does.
The leaders of the EU have, up to this point, declined to discuss the likelihood of a recession or a fresh financial crisis, but they have conceded that the next winter would be challenging.
Magdalena Andersson, the Prime Minister of Sweden, gave an interview to CNBC on Friday morning and said that she is ready for leaders to meet again the following month, provided that the bloc can propose initiatives to alleviate the economic difficulties.
She remarked, “We are obviously in a terrible economic position with the inflation and the shortages of gas and electricity.” “We are definitely in a difficult economic situation with the shortages of gas and electricity.”
The Metsola Committee of the European Parliament concurred. “The next few months will be extremely challenging, and we are afraid that we are going to be facing a, shall we say, pricey and difficult winter from the point of view of energy.”