MONDAY, MAY 2 , 2022. THE WASHINGTON POST EZ RE A
War in Ukrainegine of Europe, is particularly
unprepared for the moment.
More than half its supply of
natural gas was coming from
Russia before the invasion of
Ukraine.
Germany has shrunk that
down to 35 percent, but it is not
well positioned to get to zero
Russian gas anytime soon. It
lacks infrastructure to import
liquefied gas, and the nation’s
aggressively anti-nuclear pos-
ture has left it with just three
reactors online; the other 14
were closed down after the tsu-
nami hit the Fukushima nuclear
complex in Japan in 20 11.
German Economy Minister
Robert Habeck has said he ex-
pects his country would slide
into recession without Russian
gas. “I take this very seriously,”
he said.
The country has managed to
cut Russia’s share of Germany’s
crude oil imports from 35 per-
cent to 12 percent.
It has implemented the early-
warning phase of an emergency
energy plan, including a public
campaign to push conservation.
But if natural gas supplies drop
precipitously, the next s tep could
be rationing.
Gas would flow first to hospi-
tals and households, leaving
businesses at risk of losing pow-
er. Officials and analysts have
warned that the fallout could be
a deeper recession than Ger-
many’s central bank projected
earlier this year, as factories
shutter, hundreds of thousands
lose jobs and inflation soars.
Instead of buying oil and nat-
ural gas from Russia — where
production costs are very low
and pipeline transportation is
cheap — Europe must turn in t he
immediate term to more expen-
sive alternatives such as the
United States, which until seven
years ago had no gas export
facilities at a ll. European compa-
nies must add on $1.5 0 per
thousand cubic feet — anywhere
from 30 to 50 percent of the cost
of the gas itself — to get a tanker
of liquefied natural gas to make
the trip from the Gulf of Mexico
to Europe. Then the empty ship
must make the return voyage, a
total of 24 days in transit.
European nations are also
moving as nimbly as they can to
diversify their supplies, but en-
ergy producers can’t keep up. A
quick turnaround project that
makes available new supplies of
natural gas typically takes at
least two to four years. At the
same time, investors may be
wary of big, long-term natural
gas projects as governments and
businesses soon look to more
environmentally friendly types
of energy.
Renewable energy — predom-
inantly solar and wind — has
received a jolt from the current
crisis. “This will put the Euro-
pean transition to renewablesand other sources of gas on Jet
Skis,” said Cliff Kupchan, a politi-
cal analyst and chairman of the
political risk consulting and ad-
visory firm Eurasia Group.
But for all the talk of Europe
stepping up its efforts to bring
more renewable energy online,
that is also a long-term proposi-
tion, complicated by supply
chain issues and environmental
disputes.
The prices of renewable en-
ergy worldwide, after roughly
two decades of decline, have
edged up over the past year, and
there is little room in Europe to
quickly add legions of new re-
newable customers.
“The issue is there is n o supply
left,” said Flemming Sorenson,
vice president of Europe for
Level Ten Energy, which negoti-
ates power purchase agreements
for big energy consumers seek-
ing renewables. “There are few
new renewables contracts that
can be signed and be ready to
start before 2024.”
Sorenson points to Spain as an
example of the regulatory obsta-
cles that also stand in the way of
a quick pivot to other forms of
energy. There are more than 70
gigawatts of solar power waiting
to be deployed there. But the
process of getting it all up and
running is moving at a glacial
pace, he said. Permits have been
approved for only 20 percent of
those solar installations, he said.
Roberto Cingolani, the minis-
ter in charge of Italy’s energy
transition, said in an interview
that Italy has been racing to
reach deals with a number of
African countries and is now
hoping to be energy independ-
ent from Russia by spring of
202 4.
“It’s a real change, moving the
center mass of the system
toward the south,” said Cingo-
lani, who recently traveled to
Angola and the Republic of Con-
go. “I think the entirety of Eu-
rope realized that depending
largely on a single country, a
single supplier, is not a very
smart view.”
He said Italy is better posi-
tioned than other European
Union nations to handle the
transition, because i t already has
two pipelines to Africa and an-
other going east toward Azerbai-
jan. But he said that the contin-
gency plan will take some time to
ramp up and that the country
would be vulnerable in the
short-term if Russia suddenly
cuts off its supply.
Under such a scenario, Italian
consumers could be asked to
reduce air conditioning use. And
companies could face pro-
grammed interruptions of their
energy supply. “The hope is that
we don’t have to do that much,”
Cingolani said. “The hope is that
we don’t have to do anything at
all.”
One thing that could easeBY EVAN HALPER,
STEVEN MUFSON
AND CHICO HARLANAlgeria has long been a medi-
um-stakes player in the global
game of oil and gas exports, but
the energy crisis in Europe has
created an opening for t he North
African nation to up the ante.
Italian Prime Minister Mario
Draghi flew to Algiers just a few
weeks a go t o ink an agreement to
boost natural gas imports from
Algeria by 40 percent through an
underused pipeline that runs
beneath the Mediterranean Sea.
Other oil and gas exporters
that were not previously front
and center in the global energy
conversation, such as Angola,
Nigeria and the Republic of
Congo, are also emerging as
potential players for the future
of Europe. And European na-
tions hurrying to unshackle
themselves from Russian gas are
turning to more reliable, but
costly, liquefied natural gas pro-
viders such as Qatar and the
United States.
The moves are part o f a scram-
ble in Europe to respond to the
energy crisis prompted by Rus-
sia’s invasion of Ukraine. Rus-
sian President Vladimir Putin in
recent days lashed out at his foes
in the West by c utting o ff n atural
gas supplies to Bulgaria and
Poland for their refusal to pay in
rubles. Other large consumers of
Russian gas, including Germany
and Italy, have sought to reas-
sure their citizens that they are
seeking workarounds if Putin
expands the cutoff as he has
threatened.
But under almost every sce-
nario, the next 18 months are
going to be a harrowing time for
Europe, as the impacts of high
prices ripple around the world
and governments struggle to
power their factories, heat their
homes and keep their electricity
plants running. There are not
enough alternatives in the near
term to avoid major economic
pain in the coming winter if
Russia shuts down supply. This
month, for instance, the German
central bank warned that the
country’s economy could shrink
by 2 percent if the war persists.
“This is a very dangerous
game that is playing out,” said
Edward Chow, an energy secu-
rity scholar at the Center for
Strategic and International
Studies who previously worked
in the industry for decades. “I
don’t know how this is supposed
to end. It feels like it is going to
end in a very bad place for both
Western Europe and Russia.”
“There is only so much [natu-
ral gas] to go around,” Chow
said. “No one is going to be able
to produce more liquefied natu-
ral gas quickly no matter what
fantasies governments want to
spin.”
What has transpired is a sud-
den global reordering of the
energy markets stoked by an
abrupt turnaround by Russia,
which spent decades trying to
use its generous oil and gas
reserves to integrate into the
world economy, said Daniel Ye-
rgin, an energy historian and
vice chairman of S&P Global.
For now, Europe’s gas market
has become a patchwork. Italy
can turn to Algeria, Bulgaria can
turn to Greece, and Poland can
pivot to a long-planned expan-
sion of a terminal for liquefied
natural gas, or LNG, i mports and
a pipeline coming online from
Norway.
“It’s a dramatic, unexpected
reordering of world energy. Two
months ago the Europeans could
not possibly h ave imagined shut-
ting the door on Russian energy,
and now it’s only a question at
this point of how long will it
take,” Yergin said. “And it’s hap-
pening faster than would have
been imagined possible only two
months ago. Putin in eight weeks
of war has destroyed what he
spent 22 years building: inte-
grating Russia into the world
economy.”
Germany, the economic en-
some pressure on energy-con-
suming nations would be a slow-
down in the world economy. The
latest lockdowns in China to
stamp out the coronavirus have
probably lowered world oil de-
mand by 1 million barrels a day,
the advisory firm S&P Global
estimates, making it difficult for
Beijing to come to Moscow’s aid.
The United States and other
countries are drawing down
strategic stockpiles at a rate of
1.3 million barrels a day. The
International Monetary Fund es-
timated that the world economy
would slow to 3.6 percent this
year.
This is also the time of year
when Europe is supposed to bebuilding up gas storage. Last
year, Russian cuts in supplies
made it difficult to get through
the winter. If Russia cut all its
gas flows, the worst-hit coun-
tries would be Germany, with
storage currently just 33. 5 per-
cent full, Italy at 35 percent, and
Hungary at 19.4 percent, accord-
ing to a note to investors from
RBC Capital Markets, an invest-
ment advisory arm of RBC.
Where this all goes depends
on the Kremlin’s next moves.
Russia is heavily reliant on gas
and oil revenue, and it would
inflict economic pain on itself by
cutting Europe’s major econo-
mies off from natural gas. At the
same time, i ts European c ustom-ers have already vowed to be
done with Russian imports alto-
gether by 20 27. Russia’s a bility to
use its power over the flow of
energy as an economic weapon
against Europe is only going to
diminish. Some analysts suggest
that could push Russia to use
that weapon now, while it has
leverage.
All of this is creating fresh
opportunity in Algeria and other
African nations.
Algeria was already exporting
gas to Europe before war broke
out. It was sending it by pipeline
to Italy and Spain. Algeria also
has extra capacity in facilities
that turn natural gas into a
liquid fit for shipping. There
were a number of issues inhibit-
ing further exports, some of
them involving concerns about
there being enough fuel for do-
mestic consumption as the na-
tion’s economy grows, as well as
geopolitical considerations
around getting too c losely tied t o
Europe.
But the No. 1 thing holding
back Algeria and other African
nations sitting on large reserves
of natural gas has been Europe’s
preference for gas from Russia,
which was cheaper and more
readily available, said Vijaya Ra-
machandran, an Africa energy
expert at t he Breakthrough Insti-
tute in California. Europe also
saw in Russian gas a n easier path
to transitioning to renewables,
as it did not require major new
investment in pipelines and oth-
er infrastructure at home and
abroad.
“Africa has wanted to develop
its natural gas r eserves for a long
time,” Ramachandran said. “But
investors have been mixed, say-
ing it is too difficult, too far away,
too expensive. That calculus has
changed. This is a moment for
Africa. And I think for countries
in the region that have substan-
tial reserves and are being
looked at by European investors
with a great deal of interest.”Harlan reported from Rome.
Loveday Morris in Berlin and Emily
Rauhala in Brussels contributed to
this report.Europe scrambles to replace energy imports from Russia
Supply crisis opens door
for A frican countries to
become bigger playersBARTEK SADOWSKI/BLOOMBERG NEWS
Pipework at an underground gas storage facility in Poland. Russia has halted gas flows to Poland and Bulgaria for their refusal to pay in
rubles. If it cuts supply elsewhere, there are not enough alternatives in the near term to avoid major economic pain in the coming winter.WEGET ITDONE.OVER TEN THOUSAND HOMEOWNERS
SERVED IN THE DMVIndustry leading 5 year warrantySkilled and licensed professionals
that care for you and your homeVoted “Best Handyman” in
Washington City Paper and
Bethesda MagazineAwarded “Top Workplace” by
The Washington PostVA 703.691.
MD 301.388.595 9
DC 202.770.
ScheduleFRED.comA DIVISION OF VA #2701039723 | MD MHIC #1176 | DC #WINDOWSSIDINGDOORSTRIMTILEVANITIESFLOORINGCOUNTERTOPSACCESSIBILITY& MOREwapo.st/medicalmysteries
S0137-3x1.Read “Medical Mysteries,” Tuesdays in Health & Science.
First he was hoarse.Then he couldn’t chew...