Amid the conflict with Russia and Ukraine in which the EU, supported by the US, is threatening to place more sanctions on Russia, the possibility of Russia cutting gas supplies to Europe is unrealistic, according to Danila Bochkarev, an associate researcher from the Universite Catholique de Louvain (UCLouvain) in Belgium on Tuesday.
Bochkarev told Anadolu Agency of the divisions and uncertainty of member states arising from the debate in the EU over what acceptable restrictions could be placed on Russia if the conflict with Ukraine escalates, bearing in mind the impact on oil and gas supplies on the bloc that his highly reliant on Russian gas.
He explained that for some members, gas is central for their economies, as demonstrated by their successful lobbying for the inclusion of natural gas in the EU Taxonomy, a system that classifies environmentally sustainable economic activities.
He added that another issue with gas security in Europe is the need to pump gas into the storage and this might be a costly undertaking due to the price level.
'This might be reflected in the decision on potential restrictions. In this context, oil is more fungible from an importer's perspective,' he said.
Qatar’s Emir Sheikh Tamim bin Hamad Al Thani on Tuesday called for more dialogue to ensure the security of global gas supplies amid signs of a natural gas crisis in Europe due to escalating tensions between Russia and the West.
However, Bochkarev claimed that high energy prices are the bi-product of the European Commissions' policies, and have little to do with Russia or the country’s gas giant, Gazprom.
He explained that the EU’s regulations towards energy transition deterred investors, resulting in a fall in oil and gas investments.
Furthermore, he said that investments in renewables were insufficient to plug the gap, creating the current capacity deficit. Consumers were also subject to additional costs during price spikes from the reliance on commodity purchases on the spot market, he said.
Eurozone inflation and high utility bills are also factors up for debate in agreeing on what is an acceptable response to Russia and in determining the type of sanctions that should be imposed.
'There is also a unanimity issue, and not everybody is keen to go ahead. Italy’s Prime Minister Mario Draghi stressed that sanctions should not include energy,' Bochkarev said.
In a speech on Monday, Russian President Vladimir Putin announced the recognition of the Donetsk and Luhansk regions as independent states.
The EU agreed to update the already-existing sanctions lists, including applying asset freezes and travel bans on 193 people.
Following the increasing tension between Russia and Ukraine, natural gas prices in Europe for March futures contracts started the day with an increase of 21%.
The price of March futures contracts traded on the TTF, the Netherlands-based virtual natural gas trading point with the highest depth in Europe, closed at €72 per megawatt-hour on Monday.
In early trading on Tuesday, prices traded at €87, showing a 21% increase compared to the closing price on Monday.
By Murat Temizer
Anadolu Agency
energy@aa.com.tr