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Jeremy Weir, the CEO of Trafigura Group, has warned that Europe is at risk of winter power cuts due to insufficient gas reserves. The news comes despite Russian promises to increase their supply of gas to Europe.
The shortage of gas has led Mr Weir to believe that a cold winter across the continent could lead to rolling power outages throughout Europe. Whilst Weir’s comments have been taken seriously, the energy crisis would have to significantly worsen before this happens. The first step states will take in order to mitigate this outcome will be to cut the gas supply to non-essential industries before it affected the electrical grid.
The crisis has become increasingly political with many European states hitting out at the Russian state-owned gas supplier Gazprom for, as they see it, holding Europe ransom in order to compound pressure on Germany and push through the Nord 2 pipeline deal, an accusation the Russian state denies.
The Nord Stream 2 pipeline would send 55bn cubic metres of gas per year from Russia and under the Baltic Sea to Europe without having to go through Ukraine.
However, this week the German Energy regulator announced further delays to the pipeline project because Gazprom had failed to properly set up an operating subsidiary, required by German law. The announcement caused an immediate rise in UK gas prices by almost 10% to £2.24 per therm with a similar rise of 8% to €87.80 per megawatt hour in Europe.
Whilst it is unclear how the Energy crisis will play out, the delay to the Nord 2 pipeline represents a critical blow to the European gas supply this coming winter.
How could these winter power cuts affect your business? Get in contact with BP Consulting today and see what we can do for your business.