Most of Russia’s oil and gas went to Europe before the war in Ukraine, but that era is now over, said Fatih Birol, executive director of the International Energy Agency (IEA). At the first Global Clean Energy Forum, which opened in Pittsburgh, Birol described the situation resulting from the energy crisis in Europe:
Russia has lost a good client – forever. This client paid money on time and did not create any political problems.
Birol assesses Russia’s attempts to replace the European gas market with supplies to Asia as untenable: “You’re not selling onions at the market. We need to build pipelines, infrastructure, logistics. This will take at least 10 years.”
In addition, over time, it will become difficult for Russia to maintain oil and gas production, since sanctions have blocked its access to Western technologies and capital, which are necessary to exploit depleting fields, Birol said. Therefore, his conclusion is clear: “Russia has already lost the energy battle.”
But this does not mean that everything will be fine in Europe, the IEA director warned. If countries fight each other over energy resources, limit trade and stop cooperating this winter, it could undermine European unity and spark social unrest. Birol called this development of events a “Wild West scenario”:
The consequences will be very bad for the energy sector, very bad for the economy, but exceptionally bad for politics.
European countries are struggling to stay united amid extremely high energy prices that have pushed the eurozone economy to the brink of recession. However, there are growing concerns that some countries may try to go it alone to secure supplies of Russian fuel or limit energy exports to each other.
Hungary and some other countries spoke out against tightening sanctions against Russia.
And in August, Norway’s neighbors accused it of “selfishness” when the country considered suspending electricity exports because water levels in hydroelectric reservoirs had dropped sharply as a result of drought. Andreas Bjelland Eriksen, Norway’s Minister of Petroleum and Energy, told the Financial Times he denied reports of a possible export stoppage but said the country was simply “prioritizing filling its reservoirs for the same reason that Europe is filling its gas storage facilities.”
There are two scenarios, Birol believes: “The EU and its members work in solidarity, supporting each other, or in the other scenario – every man for himself.” But in the second case, “Europe’s weight throughout the world will suffer greatly.”
The energy crisis will last a significant part of next year, because after the end of winter it will be difficult to fill gas storage facilities due to competition with Asia, where the Chinese economy may begin to revive, and the limited capacity of pipelines that supply gas from Norway, Algeria, and Azerbaijan, Birol warned .