Europe Isn’t Prepared if Russia Turns the Gas Taps Off

Energy woes seep into the West’s response to a potential Russian invasion of Ukraine.

By Robbie Gramer and Christina Lu

Employees work at a gas drilling rig at a gas field in Russia.

January 27, 2022, 2:45 PM

The Biden administration is scrambling to help European allies find alternative sources of gas supplies as tensions between the West and Russia flare up over Moscow’s amassing of troops on Ukraine’s borders. Yet there are few alternatives to Russian gas for U.S. and European officials to turn to, exposing Europe’s precarious position on energy security.

The crisis on Ukraine’s borders has served as a reminder of how reliant Europe is on Russian energy exports, a geopolitical pressure point that the Kremlin has used as leverage over European countries in the past; more than 40 percent of Europe’s natural gas imports come from Russia. Some countries, most notably Germany, are especially dependent on Russian gas, which has further muddled the Western response to the crisis.

Even as the Nord Stream 2 gas pipeline is included in the Western sanctions package, Berlin has still sought energy exemptions from any Western sanctions on Russia.

U.S. President Joe Biden will meet with the ruling emir of Qatar, one of the world’s biggest exporters of natural gas, at the White House on Jan. 31, and his administration is reaching out to other natural gas producers to explore how to divert gas supplies to Europe if the Kremlin moves forward with plans to invade Ukraine. Administration officials on Wednesday also urged U.S. gas exporters to find ways to divert shipments to Europe in the event of an invasion.

For all the diplomatic maneuvering to find alternate fuel supplies, however, industry experts and Western diplomats concede there are no good options—an uncomfortable fact the Kremlin could use in its favor if the crisis worsens. Few big gas exporters have excess capacity they can send to Europe, which in any event lacks a well-developed infrastructure for importing liquefied natural gas (LNG), especially where it’s most needed in Central and Eastern Europe.

“The hard reality is that there’s just not a lot of slack in the global gas market,” said Robert McNally, the founder and president of Rapidan Energy Group. “The U.S. could find that it may help free up a cargo of LNG here or a cargo of LNG there, but it is not possible to find or produce a lot of gas that would offset the loss of Russian supplies.”

U.S. and European officials fear that any Russian incursion in Ukraine, which they vow will be met with swift economic sanctions and diplomatic reprisals in the West, will push Moscow to restrict or even halt altogether the flow of oil and natural gas to European markets. This has seeped into the thinking of how Western diplomatic and military officials are mapping out a response to a potential Russian invasion.

“If relations get very ugly, as now seems quite possible, then quite a lot of Europe may be in for a very cold and a very expensive winter,” said Adam Thomson, the director of the European Leadership Network and former British ambassador to NATO.

As top Biden officials meet with their Russian and European counterparts to try to defuse the crisis, other members of the administration are working on backup plans for Europe’s energy needs.

“We’ve been working to identify additional volumes of non-Russian natural gas from various areas of the world—from North Africa and the Middle East to Asia and the United States,” a senior administration official told reporters this week. “Correspondingly, we’re in discussions with major natural gas producers around the globe to understand their capacity and willingness to temporarily surge natural gas output and to allocate these volumes to European buyers.”

Amos Hochstein, a senior advisor for energy security at the U.S. State Department, has been leading discussions with energy companies on the matter, officials and other people familiar with the matter told Foreign Policy.

A Russian invasion of Ukraine, and the ensuing barrage of reprisals and counter-reprisals, could also send shockwaves into other commodity markets where Russia accounts for a substantial share of global supplies, including oil, coal, wheat, and palladium.

“It’s not just gas we’re talking about,” said Helima Croft, a managing director and the global head of commodity strategy at RBC Capital Markets. “People keep saying Russia is a ‘gas station,’ but it’s so much more. They’re like the Walmart of commodities. They’re a superstore.”

For Europe, already under the squeeze with supply shortages and high prices in the middle of winter as it tries to transition away from coal to greener energy sources, gas still presents the most pressing vulnerability. Qatar is already producing LNG at the height of its capacity, and most of that is already spoken for—locked into long-term contracts to ship to Asian markets. The United States, itself a major natural gas producer, is also producing close to maximum export capacity, leaving it with limited options to redirect supplies to Europe.

Even then, there are a limited number of LNG terminals in Europe that could take in alternate supplies, which would not be enough to make up for an absence of Russian supplies. Europe currently has 28 large-scale LNG import terminals, a capacity on paper sufficient to meet about 43 percent of the continent’s demand, but those terminals are mostly concentrated in Western Europe.

Some of the world’s other major suppliers of natural gas—such as Iran and China—aren’t exactly on friendly terms with Washington and its NATO allies and have few export options to Europe even if they were. The worst-case scenario—Russia halting all energy exports to Europe—could be catastrophic.

“There is no way for Europe to fully offset an outright cessation of Russian gas exports,” said Nikos Tsafos, the James R. Schlesinger chair in energy and geopolitics at the Center for Strategic and International Studies. “The system cannot cope with a destruction of that magnitude.”

Still, most experts view such a possibility as highly unlikely. Europe’s energy reliance on Russia is a double-edged sword; Moscow relies on revenue from its commodities exports just as much as Europe relies on those commodities. Completely turning off the tap could thus put an untenable strain on Russian suppliers.

Russia “needs oil and gas revenues at least as much as Europe needs its energy supply,” the senior Biden administration official said. “This is not an asymmetric advantage for [Russian President Vladimir] Putin; it’s an interdependency.”

The question is whether Putin’s willingness to suffer economic hits for a short period of time outweighs Europe’s ability to go cold turkey on Russian energy. Despite posturing from the Biden administration, most experts believe that if it came to this, Putin could outlast the West.

Still, most experts agree that the Biden administration’s efforts to find alternate supplies aren’t an exercise in futility.

“You have to check your boxes. You have to make sure you’re doing everything you can to make as much supply available as possible,” Rapidan’s McNally said. “I don’t think it’s futile, but nor is it going to be a game-changer.”

Other possible scenarios, such as Russia briefly pausing its exports or only cutting off gas through Ukraine while keeping other pipelines to Europe open, would be more economically viable for the Kremlin.

Indeed, it has done so before. For years, Moscow has wielded its energy supply to pressure rivals and secure political concessions. As Europe struggled under an energy crunch last year, Russia conditioned higher gas exports on the approval of its controversial Nord Stream 2 pipeline to Germany—a project that U.S. and Eastern European policymakers argue is a geopolitical power play by the Kremlin and has nothing to do with commercial interests. In 2006 and 2009, it briefly severed its supply to Ukraine over a pricing feud.

“Russia’s already taken steps and linked its willingness to provide more gas to Europe to the Kremlin’s geopolitical agenda,” said Amy Myers Jaffe, a research professor at Tufts University. “People talk about it like it’s theoretical, but it’s not. Eastern European countries that were in the crosshairs of the Kremlin have received less gas.”

In the winter months, Europe is especially vulnerable to the dangers of an intensified energy crunch. Under the continent’s ongoing energy crisis, gas prices hit record highs and disrupted already strained supply chains. If Moscow further chokes Europe’s supply, the impacts could be even more pronounced.

“The continent’s kind of at the mercy of the weather at this point,” said Samantha Gross, a fellow at the Brookings Institution. “If they have a nasty winter, this could get very rough, very fast.”

Industry analysts are still watching diplomatic maneuvers, such as Biden’s meeting with the Qatari emir, to see if the United States can at least scrape together some extra gas supplies to help temporarily alleviate, if not erase, the pain of a cutoff from Russian gas.

“The question is, can they provide assistance in terms of cargoes that might be found for Europe, which may not be needed in Asia because of a warmer winter there, can those cargoes be freed up?” said Croft of RBC Capital Markets. “But we’re talking about mitigation, not backstopping.”

Other experts also hope the current crisis will prompt European policymakers to rethink yet again how to secure their energy supplies in the future. After previous energy showdowns with Russia, Europe overhauled its gas markets and began a search for alternate suppliers, including the United States, but has not managed to pare back its energy dependence on Moscow.

“The only thing we can do that’s really relevant and useful is to use this tough learning experience to rethink how you organize energy security in the long run,” McNally said. “I know that’s not a lot of help for the freezing cold Belgian consumer in the coming weeks, but the brutal reality is there’s not a lot you can do for those folks beyond pray for warmer weather. What you can do is rethink your longer-term energy security strategy.”

Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. Twitter: @RobbieGramer

Christina Lu is a reporter at Foreign Policy. Twitter: @christinafei