OPINION: The European Union has stood up to Russian aggression against Ukraine with swingeing sanctions and bold promises.

The bloc depends on Russia for more than 40% of its natural gas needs — Russia exported 155 billion cubic metres in 2021 — but has pledged to reduce imports by two-thirds in 2022, opening the road to complete independence from Russian gas by 2030.

This objective is not unattainable, but it is very challenging.

The first producer to stand up with the offer of new supplies to the European market was Norway.

Optimists in the Norwegian oil and gas sector reckon that changing reservoir management practices to give ultimate recovery of oil less primacy could rapidly boost annual production capacity by more than 15 Bcm.

There seems to be dose of idealism here, however, and about half of this seems to be a more attainable goal.

Similar considerations apply to the other two nations with pipeline links to Europe, Algeria and Azerbaijan. Both can probably send more gas, but not on a scale to match European needs.

Then there was the promise made by US President Joe Biden last week of an additional 15 Bcm of liquefied natual gas for the European Union, adding to the 22 Bcm that was shipped from the US in 2021.

It is true that both the US and Qatar have been expanding LNG capacity, but they are in different phases.

The US expects to increase its annual capacity by another 14 Bcm this year, but is coming to the end of an investment cycle, meaning that expansion will falter for a few years while it awaits new export projects to reach majority. Qatar’s LNG expansion will not come soon enough to meet the near-term needs.

The alternative sources of gas could be enough to fill the gap left by Russian supplies, but for all the good intentions behind plans to supply more LNG capacity and import terminals, a harsh winter would soon expose the risks.

Germany’s decision this week to trigger the early warning phase of an emergency plan for its energy sector was a response to specific Russian threats to cut gas supplies, but the prospect of an energy shock flooring Europe’s biggest economy is real.

Europe seems to have little choice but to drop the bar on its decarbonisation and use more coal for longer than planned, especially if the next winters are cold ones.

But not all is lost in the battle against climate change.

The US described a goal of supplying approximately 50 Bcm per year of additional LNG to the EU on the understanding that prices should reflect long-term market fundamentals and stability of supply and demand.

Competition with Asia for cargoes is likely to ensure that natural gas prices stay high in most scenarios, so the boom in renewable energy investments that has been taking place in Europe is surely just beginning.

One sector that is already surging in response to the new scenario is that of biogas, with an increasingly productive plug-in to the circular economy.

There is much to be done in the agriculture sector, for example, in developing organic and low-carbon fertilisers, again plugging into the circular economy.

Governments will come under pressure from higher energy prices, but they should also resist the temptation to pick on renewables to claw back revenues that can be used to subsidise lower prices for fossil fuels.

Renewables investments should also consider energy supplies holistically rather than always being seen as a mortal enemy of fossil fuels.

For instance, solar power has enormous potential in Algeria. More investment there could free up natural gas that is today used for domestic consumers, providing cheaper, cleaner power at home and more exports to energy-starved Europe.

(This is an Upstream opinion article.)

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