WSJ: Winter’s approach raises stakes in European energy crisis

Europe is as ready as it can be for winter without Russian natural gas, but there is no margin for error.

"Storage facilities of gas for heating and power generation are almost full, consumption is down and liquefied-natural gas tankers are steaming in. Europe in a stronger position than feared in recent months, after Moscow slashed gas deliveries in retaliation for Western sanctions over the invasion of Ukraine," The Wall Street Journal wrote in an article on October 16.

By buying as much LNG as possible from countries such as Norway and the U.S., Europe has filled storage sites to more than 90% of capacity. Russian gas arriving via pipeline accounts for 6% of the continent’s gas supply, according to S&P Global Commodity Insights, down from almost 30% before the war. Europe also imports a small amount of Russian LNG.

Floating LNG terminals are being moored off European coastlines, which will enable countries including Germany to unload and store more of the superchilled fuel.

Europeans are also cutting their energy use—a necessary step to prevent shortages later in winter, officials say. Where they can, companies in industries such as glass and papermaking have turned to coal and oil, or changed shift patterns to avoid using power when demand is at its peak. Some factories have closed. Power producers are burning more coal.

Low temperatures could also spark a contest between North America and Europe for LNG supplies. Still weather conditions, meanwhile, would slow down wind turbines, while a particularly cloudy winter would reduce solar-power generation.

Another risk is that gas flows could fall short because of technical malfunctions or politically motivated attacks. The suspected sabotage of the Nord Stream gas pipelines under the Baltic Sea and drones spotted near Norwegian gas platforms have highlighted the vulnerability of energy infrastructure.

Officials and analysts say Moscow might cut off the remaining gas that arrives via pipelines through Ukraine and Turkey. Central and Eastern European countries that still buy Russian pipeline gas, above all Moldova, which gets all its gas through Ukraine, are most vulnerable.

Keeping gas consumption low is a key part of Europe’s plan for the winter. The EU is targeting a 15% reduction in gas demand. In September, gas consumption was 11% below the five-year average, according to commodities-data firm ICIS.

Some countries have introduced mandatory energy-saving measures. France and Germany have restricted the use of lights in shops and public buildings at night.

Italy moved quickly this year to replace most Russian gas, drawing more from North African pipelines and filling up LNG terminals. With storage facilities over 93% full, Italy still has enough gas to export to other European countries.

The EU’s political divisions have hampered parts of its response to the crisis. Italy is one of several countries pushing for a cap on gas prices, pitting it against Germany and other deeper-pocketed members that say a price ceiling could divert gas elsewhere. Leaders meet to decide on the proposals this week. Russia has said it would halt gas flows if a price cap were imposed.

In Germany, the government would declare an emergency, handing responsibility for distributing and allocating gas to the national energy regulator. The EU could force member states to cut consumption if conditions worsen.

The U.K.’s electricity-grid operator said there could be rolling blackouts if there is insufficient gas in the country and electricity imports from the continent are severed. National Grid ESO said it would pay industrial and commercial power users to lower demand.

How Europe fares this winter will help determine the severity of the gas crunch looming in 12 months’ time. If storage levels plunge, analysts say refilling Europe’s gas reserves in 2023 with little or no Russian gas will be extremely difficult.