Thread by @EdConwaySky

What would happen to Europe if Russia turned off the gas?
Short (and perhaps surprising) answer: the UK would play a crucial role in keeping the lights on and homes heated across much of the continent.
Longer answer here: news.sky.com/story/energy-c…

Quick run through the numbers, tho it’s worth underlining this is v much a worse case scenario & it’s v v v unlikely Russia would cut off European gas supplies. However such exercises can actually tell you quite a lot about the way the world works - that’s certainly the case here

At current typical usage Russia provides roughly 270m cubic metres of gas a day to continental Europe via main pipelines. Most via Nord Stream I, then Ukraine, then Yamal (and note this numbers can vary quite a lot). Current usage is actually a bit lower than historically...

Let’s imagine all of that disappears. What does Europe do? Well one route is to reduce the amount of gas it’s burning, by cutting off non-essential industrial supplies. This would leave an economic dent but it could reduce demand by nearly 100m cubic metres per day.

Next option would be to use some of the gas the EU has in storage. But here we run into a problem: there's not much in there by recent standards. European gas storage is currently at the lowest level for this time of the year since 2011.

Based on current usage* this storage will be exhausted by mid April - in other words just as winter is over. European countries could run down storage faster to help make good the gap. But the upshot is they're likely to run out far sooner. When temperatures are still cold

* worth saying storage use is unlikely to continue at the current rate. It slows as winter turns to spring.
Sidenote: Europe v fortunate that this is all happening alongside one of the warmest winters in a long time. Means gas usage actually lower than normal

Anyway, back to that 270m cubic metre gap. It's already been narrowed down to 175m or so because of reduced demand. Potentially 110m of that could be filled with gas from storage. So we're closing in on the dotted line. But now there's a problem...

The extra gas has to come from somewhere. A wee bit could come from the Groningen tho the recent Dutch plan to expand it won't be ready til April - too late for this winter. Hard to see much immediate potential for increasing North Sea gas from Norway & UK uk.news.yahoo.com/netherlands-ne…

That leaves a final option: liquefied natural gas, imported from the US or Qatar. But here there's another problem. Even if you could lure the tankers in, it's not clear Europe has enough capacity *in the right places* to get that gas to Germany et al

This is not to say the EU doesn't have some big LNG hubs. Spain, for instance, has TONS of capacity and lots of terminals. Problem is it's quite hard to pipe gas from Spain to the rest of the continent. Good @Bruegel_org piece which touches on that here: bruegel.org/2022/01/can-eu…

There are some N European LNG hubs in France, Netherlands, Belgium, but it's not clear you could entirely fill that remaining 70m cubic metres gap. @OxfordEnergy reckons maybe continental European LNG could provide 27m of it, leaving just over 40m. Where will that come from??

You need ideally to find a place with lots of LNG ports which could easily pipe that gas straight to where it's needed. Problem is most are already near full capacity (and not obvious all that much more could come from N Africa) with one exception...

The UK. It has more LNG capacity than Dunkerque/Zeebrugge/Rotterdam combined. It also has plenty of pipeline capacity to send gas to Europe, from Bacton to Belgium/Netherlands. Those pipes are usually used to send gas to the UK in winter (and back the other way in summer)

But this winter the UK could plausibly feed its own network with LNG, prob mostly from the US, and allow its N Sea gas to go straight to the continent. Actually to some extent this has already been happening in recent weeks

With the result that Britain, helped out by the US, could come to Europe's rescue in the event of a catastrophic cut-off of Russian gas, providing enough extra gas to prevent the lights going out and homes going cold. And here's the kicker...

None of this would necessitate political agreement or grandstanding. It's simply the way the European gas market functions. Despite leaving the common market, the UK remains plugged into an even more frictionless energy market, where prices determine where gas flows #Brexit

Indeed understanding that the UK is plugged into this market sheds a somewhat different light on the discussions abt whether we need more gas storage. For in practice we already have a massive storage facility: Europe. We send gas there in summer & (usually) withdraw it in winter

Now, what none of the above depicts is the extent to which gas prices would go through the roof if something like this happened. Even beyond today's eyewatering levels. And whatever happens this winter the next challenge is refilling storage over the summer. No mean feat.

Still: it's a more nuanced story than you might have thought. And underlines that in some senses at least the European market is quite functional. We are very unlikely to "run out" of gas. But gas at a reasonable price? That's another story. More here: news.sky.com/story/energy-c…