The head of the International Energy Agency has warned that the “energy battle” between Europe and Russia is not over, despite a sharp drop in wholesale gas prices that has eased concerns over high bills and blackouts.
Fatih Birol said Europe’s efforts to replace Russian gas supplies this winter had been a “big success” but cautioned there were lingering fears over next winter.
Vladimir Putin moved to weaponise Russian gas last year in the face of western support for Ukraine, cutting supplies into Europe and leaving countries scrambling to replace supplies for the winter.
European nations moved quickly last autumn to fill up gas storage facilities and supplies have not been depleted at the rate expected over winter thanks to periods of mild weather and efforts by businesses and households to cut back on energy usage.
Birol told the Financial Times: “Russia played the energy card and it did not win … but it would be too strong to say that Europe has won the energy battle already.
“I think Europe did a good job, [its strategy has] been a big success. But being overconfident for next winter is risky and it is time to continue and step up efforts for 2023.”
The investment bank Jefferies this week said that European gas storage facilities were 64% full, well above the 45% average over the past five years at this point in winter.
However, Russian gas supplies were flowing at normal rates through pipelines for the first half of last year, meaning efforts to fill storage facilities during 2023 will be more heavily reliant on liquefied natural gas (LNG) shipped to Europe from around the world.
Birol said about 20% of the gas that was piped from Russia into Europe is still flowing, through pipelines across Ukraine and Turkey.
The reopening of the Chinese economy after Covid lockdowns is also expected to lead to increased competition for LNG between Asia and Europe.
“Some of the achievements made on clean energy and reducing Russia’s revenues are good but it is not a permanent solution. We have had the help of mild weather. We gained some time, which is vital, but there is much more to do,” he said.
This week the huge Freeport LNG export plant in Texas began the process of reopening after eight months, which had put a further squeeze on the market.
The UK was not reliant on Russian gas before the invasion of Ukraine a year ago but the rising price of wholesale gas on international markets has fed through into UK bills.
Shortages of gas on the continent next winter could also reignite fears over winter blackouts, as Britain has low levels of gas storage and trades gas-generated electricity internationally.
